# EUR-Lex - 52013PC0235 - EN

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# 52013PC0235

**Proposal for a COUNCIL IMPLEMENTING REGULATION imposing a definitive countervailing duty on imports of certain polyethylene terephthalate (PET) originating in India following an expiry review pursuant to Article 18 of Regulation (EC) No 597/2009 /* COM/2013/0235 final - 2013/0123 (NLE) */**

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EXPLANATORY MEMORANDUM

1.           CONTEXT OF THE PROPOSAL

Grounds for and objectives of the proposal

This proposal concerns the application of
Council Regulation (EC) No 597/2009 of 11 June 2009 on protection against
subsidised imports from countries not members of the European Community ('the
basic Regulation') in the expiry review of the countervailing duty in force on
imports of certain polyethylene terephthalate originating in India.

General context

This proposal is made in the context of the
implementation of the basic Regulation and is the result of an investigation
which was carried out in line with the substantive and procedural requirements
laid out in the basic Regulation.

Existing provisions in the area of the
proposal

By Regulation (EC) No 2603/2000[1], the Council imposed a
definitive countervailing duty on imports of certain polyethylene terephthalate
('PET') originating, inter alia, in India.

By Council Regulation (EC) No 1645/2005[2], the Council amended the level
of countervailing measures in force against imports of PET from India. The amendments were a result of an accelerated review initiated pursuant to Article
20 of the basic Regulation.

Following an expiry review, the Council by
Regulation (EC) No 193/2007 imposed a definitive countervailing duty for a
further period of five years on imports of PET originating in India.

The countervailing measures were subsequently
amended by Council Regulation (EC) No 1286/2008 and Council Regulation (EU) No
906/2011, following interim reviews.

A later interim review was terminated without
amending the measures in force by Council Implementing Regulation (EU) No
559/2012.

By Decision 2000/745/EC[3] the Commission accepted
undertakings setting a minimum import price offered by three exporting
producers in India.

Consistency with other policies and
objectives of the Union

Not applicable.

2.           RESULTS OF CONSULTATIONS
WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS

Consultation of interested parties

Interested parties concerned by the proceeding
have had the possibility to defend their interests during the investigation, in
line with the provisions of the basic Regulation.

Collection and use of expertise

There was no need for external expertise.

Impact assessment

This proposal is the result of the
implementation of the basic Regulation.

The basic Regulation does not provide for a
general impact assessment but contains an exhaustive list of conditions that
have to be assessed.

3.           LEGAL ELEMENTS OF THE
PROPOSAL

Summary of the proposed action

On 24 February 2012, the Commission announced
by a notice, published in the Official Journal of the European Union, the
initiation of an expiry review of the countervailing measures applicable to
imports of certain polyethylene terephthalate originating in India.

The review was initiated following a request
lodged by the Committee of Polyethylene Terephthalate Manufacturers in Europe
(CPME) on behalf of Union producers representing nearly
95% of the Union production of PET.

The review investigation found continued
subsidisation of the product concerned which would result in the recurrence of
injury to the Union industry in case countervailing measures were lifted. It
was further established that the continuation of measures was not against the
interest of the Union.

Therefore it is suggested that the Council
adopts the attached proposal for a Regulation in order to extend the existing
measures.

Legal basis

This proposal concerns the application of
Council Regulation (EC) No 597/2009 of 11 June 2009 on protection against
subsidised imports from countries not members of the European Community.

Subsidiarity principle

The proposal falls under the exclusive
competence of the European Union. The subsidiarity principle therefore does not
apply.

Proportionality principle

The proposal complies with the proportionality
principle for the following reasons:

The form of action is described in the
above-mentioned basic Regulation and leaves no scope for national decision.

Indication of how financial and administrative
burden falling upon the Union, national governments, regional and local
authorities, economic operators and citizens is minimized and proportionate to
the objective of the proposal is not applicable.

Choice of instruments

Proposed instruments: regulation.

Other means would not be adequate for the
following reason:

The basic Regulation does not provide for
alternative options.

4.           BUDGETARY IMPLICATION

The proposal has no implication for the Union
budget.

2013/0123 (NLE)

Proposal for a

COUNCIL IMPLEMENTING REGULATION

imposing a definitive countervailing duty
on imports of certain polyethylene terephthalate (PET) originating in India following an expiry review pursuant to Article 18 of Regulation (EC) No 597/2009

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union,

Having regard to Council Regulation (EC) No
597/2009 of 11 June 2009 on protection against subsidised imports from
countries not members of the European Community[4]
('the basic Regulation') and in particular Article 18 thereof,

Having regard to the proposal submitted by
the European Commission ('the Commission') after consulting the Advisory
Committee,

Whereas:

A. PROCEDURE

1.           Measures in force

(1)       By Regulation (EC) No
2603/2000[5],
the Council imposed a definitive countervailing duty on imports of polyethylene
terephthalate ('PET') originating, inter alia, in India. By Council Regulation
(EC) No 1645/2005[6],
the Council amended the level of countervailing measures in force against
imports of PET from India. The amendments were a result of an accelerated
review initiated pursuant to Article 20 of the basic Regulation. Following an
expiry review, the Council by Regulation (EC) No 193/2007[7] imposed a definitive
countervailing duty for a further period of five years. The countervailing
measures were subsequently amended by Council Regulation (EC) No 1286/2008[8] and Council Implementing
Regulation (EU) No 906/2011[9],
following partial interim reviews. A later partial interim review was
terminated without amending the measures in force by Council Implementing
Regulation (EU) No 559/2012[10].
By Decision 2000/745/EC[11]the
Commission accepted undertakings setting a minimum import price offered by
three exporting producers in India.

(2)       The countervailing
measures consist of a specific duty. The rate of the duty is between 0 and
106.5 EUR per tonne for individually named Indian producers with a residual
rate of 69.4 EUR per tonne imposed on imports from all other producers.

2.           Existing anti-dumping
measures

(3)       By Regulation (EC) No
2604/2000[12],
the Council imposed a definitive anti-dumping duty on imports of PET
originating, inter alia, in India. Following an expiry review, the
Council, by Regulation (EC) No 192/2007[13],
imposed a definitive anti-dumping duty for a further period of five years.

3.           Request for an expiry
review

(4)       Following the publication
of a Notice of impending expiry[14]
of the definitive countervailing measures in force, the Commission, on 25
November 2011, received a request for the initiation of the review, pursuant to
Article 18 of the basic Regulation ('the expiry review'). The request was
lodged by the Committee of Polyethylene Terephthalate Manufacturers in Europe ('the applicant') on behalf of producers representing nearly 95% of the Union
production of certain polyethylene terephthalate.

(5)       The request was based on
the grounds that the expiry of the measures would be likely to result in a
continuation or recurrence of subsidisation and injury to the Union industry.

(6)       Prior to the initiation of
the expiry review, and in accordance with Articles 22(1) and 10(7) of the basic
Regulation, the Commission notified the Government of India ('GOI') that it had
received a properly documented review request and invited the GOI for
consultations with the aim of clarifying the situation as regards the contents
of the review request and arriving at a mutually agreed solution. However, the
Commission did not receive any answer from the GOI regarding its offer for
consultations.

4.           Initiation of an expiry
review

(7)       Having determined, after
having consulted the Advisory Committee, that sufficient evidence existed for
the initiation of an expiry review, the Commission announced on 24 February
2012, by a notice published in the Official Journal of the European Union
[15] ('the notice of initiation'),
the initiation of an expiry review pursuant to Article 18 of the basic
Regulation.

5.           Parallel investigation

(8)       On 24 February 2012, the
Commission also opened a review pursuant to Article 11(2) of Regulation (EC) No
1225/2009 on the anti-dumping measures in force on imports of PET originating
in India, Indonesia, Malaysia, Taiwan and Thailand[16].

6.           Investigation

6.1.        Review investigation period
and the period considered

(9)       The investigation of the
likelihood of a continuation or recurrence of subsidisation covered the period
from 1 January 2011 to 31 December 2011 (hereinafter referred to as the 'review
investigation period' or 'RIP'). The examination of the trends relevant for the
assessment of the likelihood of a continuation or recurrence of injury covered the
period from 1 January 2008 to the end of the RIP (hereinafter referred to as
the 'period considered').

6.2.        Parties concerned by the
investigation

(10)     The Commission officially
advised the applicant, the exporting producers in the country concerned, the
importers, the users known to be concerned, and the representatives of the
country concerned of the initiation of the expiry review.

(11)     Interested parties were
given the opportunity to make their views known in writing and to request a
hearing within the time limit set in the Notice of initiation. All interested
parties, who so requested and showed that there were particular reasons why
they should be heard, were granted a hearing.

(12)     In view of the apparent
large number of exporting producers in India as well as Union producers and
importers it was considered appropriate to examine whether sampling should be
used in accordance with Article 27 of the basic Regulation. In order to enable
the Commission to decide whether sampling would be necessary and, if so, to
select a sample, the exporting producers and unrelated importers were requested
to make themselves known within 15 days of the initiation of the review and to
provide the Commission with the information requested in the Notice of
initiation.

(13)     Seven exporting producers
responded to the sampling exercise and indicated a willingness to cooperate
with the review investigation. On this basis, a sample of three exporting
producers was selected based on the volume of exports to the Union. No objections
were made to this sample either by the sampled producers themselves,
non-sampled producers or the relevant authorities in India.

(14)     The three sampled exporting
producers were duly sent questionnaires to complete and replies were received
from them all. However the questionnaire reply of one Indian sampled producer
revealed that it only exported insignificant volumes of the product concerned during
the RIP and therefore it was not relevant to calculate subsidy rates for that
company. Verification visits were eventually completed in the two remaining
exporting producers which together represented 99% of total imports in volume
from India to the Union during the RIP.

(15)     Following the disclosure of
the essential facts and considerations (‘disclosure’), one Indian cooperating
producer requested a calculation of a subsidy margin. In this respect it was
reconfirmed that the exports from this company were insignificant and
consequently had no impact on the determination of the likelihood of continuation
or recurrence of subsidisation in the present expiry review. Therefore, this
request was rejected.

(16)     The Commission announced in the notice of initiation that it had
provisionally selected a sample of Union producers. This sample consisted of
four companies, out of the thirteen Union producers that were known prior to
the initiation of the investigation, selected on the basis of the largest
representative volume of production and sales that can reasonably be investigated
within the time available. The sample represented over 50% of the total
estimated Union production and sales during the RIP. Interested parties were
invited to consult the file and to comment on the appropriateness of this
choice within 15 days of the date of publication of the notice of initiation. All interested parties, who so requested and showed that there were
particular reasons why they should be heard, were granted a hearing.

(17)     Certain
interested parties raised objections concerning the sampling of Union producers.
They claimed that: (i) the Commission should not resort to sampling, in
particular, since no sampling was used in the previous investigation; (ii) the
method used for the selection of the sample was contested on the grounds that
it 'confuses three different steps', namely, standing exercise, definition of
the Union industry and sampling exercise; (iii) the provisional sample was set
up on the basis of incorrect and incomplete information; (iv) selected
provisional sample is not representative because it includes entities rather
than groups; it was also claimed that including companies that in one case went
through a recent divestment or in another case have related sales diminishes
the representativity of the sample.

(18)     The arguments raised by the parties were addressed as follows:

–
The decision to use a sample of Union producers
is made for each investigation independently depending on the particular
circumstances of each case and Article 22(6) of the basic Regulation does not
govern the use of such a sample for the determination of injury in the context
of an expiry review. Unlike the previous investigations, where the
investigation of all companies that came forward and cooperated was feasible,
the Commission considered in the current review that, in view of their large number,
not all Union producers could be reasonably investigated in the time available
and that the conditions of Article 27 were therefore met.

–
The Commission did not 'confuse' the
determination of the standing, the determination of the Union industry and the
selection of the provisional sample as these steps remained independent from
each other and were decided upon separately. It was not demonstrated to what
extent the use of the production and sales data provided by the Union producers
in the context of the standing exercise had affected the representativity of
the sample.

–
The sample was set up on the basis of the
information available at the time of selection in accordance with Article 27 of
the basic Regulation. The representativity of the sample was reviewed following
the comments of the parties concerning specific company data. None of the
comments made were considered founded.

–
As required by Article 27 of the basic
Regulation the sample was established to represent the largest representative
volume of production and sales that can be reasonably investigated within the
time available. The entities belonging to larger groups that were found to
operate independently from other subsidiaries of the same group were considered
representative of the Union industry and there was therefore no need to
investigate the entire group on a consolidated basis. At the same time, the
companies were sampled as economic entities, ensuring that all relevant data
could be verified. Moreover, the divestments and existence of related sales
were part of the characteristics of the sector in the period considered and
therefore none of these elements was considered to diminish the
representativity of the sample.

(19)     Following
the disclosure the parties reiterated the above-mentioned arguments which have
already been addressed.

(20)     Sampling for unrelated
importers was foreseen in the notice of initiation. None of the twenty four
contacted unrelated importers cooperated in the present investigation.

(21)     All five known suppliers of
raw material were contacted upon the initiation and received relevant
questionnaire. Two suppliers came forward and replied to the questionnaire.

(22)     All known users and users'
associations were contacted upon the initiation. Seventeen users submitted a
questionnaire reply. Twenty associations of users from 16 Member States made
themselves known and made submissions.

7.           Verification of
information received

(23)     The Commission sought and
verified all the information it deemed necessary for a determination of the
likelihood of a continuation or recurrence of subsidisation and resulting
injury and of the Union interest. Verification visits were carried out at the
premises of the GOI in Delhi and the following interested parties:

(a)
Exporting producers

–
Dhunseri Petrochem and Tea Limited, Kolkata, India;

–
Reliance Industries Limited, Navi Mumbai, India;

(b)
Union producers

–
Indorama Polymers Europe, UAB, Netherlands;

–
Equipolymers, Italy, Germany;

–
Neo Group, UAB, Lithuania;

–
Novapet SA, Spain;

(c)
Users in the Union

–
Coca-Cola Europe, Belgium;

–
Nestle Waters France, France.

B. PRODUCT CONCERNED AND LIKE
PRODUCT

1.           Product concerned

(24)     The product concerned by
this review is the same as the one in the original investigation, namely PET
with a viscosity number of 78 ml/g or higher, according to ISO Standard 1628-5,
originating in India. It is currently falling within CN code 3907 60 20.

2.           Like product

(25)     As
in the original and in the review investigations, it was found that the product
concerned, i.e. PET produced and sold on the domestic market of the country concerned, and PET produced and sold by
Union producers had the same basic physical and chemical characteristics and
uses. They were therefore considered to be like products according to Article 2(c)
of the basic Regulation.

C. LIKELIHOOD OF A CONTINUATION OR
RECURRENCE OF SUBSIDISATION

1.           Introduction

(26)     On
the basis of the information contained in the review request and the replies to
the Commission's questionnaire, the following schemes, which allegedly involve
the granting of subsidies, were investigated.

Nationwide schemes

(a)
Duty Entitlement Passbook Scheme ('DEPBS')

(b)
Duty Drawback Scheme ('DDS')

(c)
Focus Market Scheme ('FMS')

(d)
Focus Product Scheme ('FPS')

(e)
Status Holder Incentive Scrip ('SHIS')

(f)
Advance Authorisation Scheme ('AAS')

(g)
Export Promotion Capital Goods Scheme ('EPCGS')

(h)
Special economic zones/export oriented units
('SEZ/EOU')

(i)
Export Credit Scheme ('ECS')

(j)
Income Tax Exemption Scheme ('ITES')

Regional schemes

(k)
West Bengal Incentive
Scheme ('WBIS')

(l)
Capital investment incentive scheme of the
Government of Gujarat

(m)
Gujarat sales tax
incentive scheme ('GSTIS')

(n)
Gujarat electricity duty
exemption scheme ('GEDES')

(o)
Package Scheme of Incentives ('PSI') of the
Government of Maharashtra

(27)     The schemes specified under
points (a) and (c) to (h) above are based on the Foreign Trade (Development and
Regulation) Act 1992 (No 22 of 1992), which entered into force on 7 August 1992
(‘Foreign Trade Act’). The Foreign Trade Act authorises the GOI to issue
notifications regarding the export and import policy. These are summarised in
‘Foreign Trade Policy’ documents, which are issued by the Ministry of Commerce
every five years and updated regularly. The Foreign Trade Policy document
relevant to the RIP of this investigation is the 'Foreign Trade Policy
2009-2014' ('FTP 09-14'). In addition, the GOI also sets out the procedures
governing FTP 09-14 in a ‘Handbook of Procedures, Volume I’ (‘HOP I 09-14’).
The Handbook of Procedures is also updated on a regular basis.

(28)     The scheme specified under point
(b) above is based on section 75 of the Customs Act of 1962, on section 37 of
the Central Excise Act of 1944, on sections 93A and 94 of the Financial Act of
1994 and on the Customs, Central Excise Duties and Service Tax Drawback Rules
of 1995. Drawback rates are published on a regular basis; those applicable to
the RIP were the All Industry Rates (AIR) of Duty Drawback 2011-12, published
in notification No. 68 / 2011- Customs (N.T.), dated 22.09.2011. The duty
drawback scheme is also referred to as a duty remission scheme in chapter 4 of
FTP 2009-2014.

(29)     The scheme specified under
point (i) above is based on sections 21 and 35A of the Banking Regulation Act
1949, which allow the Reserve Bank of India (‘RBI’) to direct commercial banks
in the field of export credits.

(30)     The scheme specified under
point (j) above is based on the Income Tax Act of 1961, which is amended by the
yearly Finance Act.

(31)     The scheme specified under
point (k) above is administered by the Government of West Bengal and set out in
Government of West Bengal Commerce & Industries Department notification No
580-CI/H of 22 June 1999, replaced by notification No
134-CI/O/Incentive/17/03/I of 24 March 2004.

(32)     The scheme specified under
point (l) above is administered by the Government of Gujarat and is based on Gujarat’s industrial incentive policy.

(33)     The
scheme specified under point (m) above is administered by the Government of
Gujarat and based on its industrial incentive policy

(34)     The
scheme specified under point (n) above is based on the Bombay Electricity Duty
Act of 1958.

(35)     The scheme specified under
point (o) above is managed by the state of Maharashtra and is based on
resolutions of the Government of Maharashtra Industries, Energy and Labour
Department.

(36)     The investigation revealed
that, during the RIP, the following schemes conferred benefits upon the sampled
exporting producers in respect of the product concerned:

Nationwide scheme

(a)
Duty Entitlement Passbook Scheme ('DEPBS')

(b)
Duty Drawback Scheme ('DDS')

(c)
Focus Market Scheme ('FMS')

(d)
Status Holder Incentive Scrip ('SHIS')

(e)
Advance Authorisation Scheme ('AAS')

Regional schemes

·
West Bengal Incentive
Scheme ('WBIS').

2.           Duty Entitlement Passbook
Scheme ('DEPBS')

(a)
Legal Basis

(37)     The detailed description of
the DEPBS is contained in chapter 4.3 of FTP 09-14 as well as in chapter 4 of
HOP I 09-14.

(b)
Eligibility

(38)     Any manufacturer-exporter
or merchant-exporter is eligible for this scheme.

(c)
Practical implementation

(39)     An exporter can apply for
DEPBS credits which are calculated as a percentage of the value of products
exported under this scheme. Such DEPBS rates have been established by the
Indian authorities for most products, including the product concerned. They are
determined on the basis of Standard Input Output Norms ('SIONs') taking into
account a presumed import content in the export product and the customs duty
incidence on the presumed import content, regardless of whether import duties
have actually been paid or not. The DEPBS rate for the product concerned during
the RIP of the current investigation was 8 % with a value cap of 58 INR/kg.

(40)     To be eligible for benefits
under this scheme, a company must export. At the time of the export
transaction, a declaration must be made by the exporter to the Indian
authorities indicating that the export is taking place under the DEPBS. In
order for the goods to be exported, the Indian customs authorities issue,
during the dispatch procedure, an export shipping bill. This document shows,
inter alia, the amount of DEPBS credit which is to be granted for that export
transaction. At this point in time, the exporter knows the benefit it will
receive. Once the customs authorities issue an export shipping bill, the GOI
has no discretion over the granting of a DEPBS credit. The relevant DEPBS rate
to calculate the benefit is that which applied at the time the export
declaration was made.

(41)     It was found that in
accordance with Indian accounting standards, DEPBS credits can be booked on an
accrual basis as income in the commercial accounts, upon fulfilment of the
export obligation. Such credits can be used for payment of customs duties on
subsequent imports of any goods, except capital goods and goods where there are
import restrictions. Goods imported against such credits can be sold on the
domestic market (subject to sales tax) or used otherwise. DEPBS credits are
freely transferable and valid for a period of 24 months from the date of issue.

(42)     Applications for DEPBS
credits are electronically filed and can cover an unlimited amount of export
transactions. The deadline to submit applications is 3 months after
exportation, but as clearly provided in paragraph 9.3 of the HOP I 09-14,
applications received after the expiry of submission deadlines can always be
considered with the imposition of a minor penalty fee (i.e. 10 % of the
entitlement).

(43)     It was found that both
sampled companies used this scheme during the first three quarters of the RIP.

(d)
Conclusion on DEPBS

(44)     The DEPBS provides
subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the
basic Regulation. A DEPBS credit is a financial contribution by the GOI, since
the credit will eventually be used to offset import duties, thus decreasing the
GOI’s duty revenue which would be otherwise due. In addition, the DEPBS credit
confers a benefit upon the exporter, because it improves its liquidity.

(45)     Furthermore, the DEPBS is
contingent in law upon export performance, and is therefore deemed to be
specific and countervailable under Article 4(4), first subparagraph, point (a)
of the basic Regulation.

(46)     This scheme cannot be
considered as permissible duty drawback system or substitution drawback system
within the meaning of Article 3(1)(a)(ii) of the basic Regulation. It does not
conform to the strict rules laid down in Annex I point (i), Annex II
(definition and rules for drawback) and Annex III (definition and rules for
substitution drawback) of the basic Regulation. An exporter is under no
obligation to actually consume the goods imported free of duty in the
production process and the amount of credit is not calculated in relation to
actual inputs used. Moreover, there is no system or procedure in place to
confirm which inputs are consumed in the production process of the exported
product or whether an excess payment of import duties occurred within the
meaning of point (i) of Annex I and Annexes II and III of the basic Regulation.
Lastly, an exporter is eligible for the DEPBS benefits regardless of whether it
imports any inputs at all. In order to obtain the benefit, it is sufficient for
an exporter to simply export goods without demonstrating that any input
material was imported. Thus, even exporters which procure all of their inputs
locally and do not import any goods which can be used as inputs are still
entitled to benefit from the DEPBS.

(e)
Abolishment of the DEPBS and transition to DDS

(47)     By
means of Public Notice No 54 (RE-2010)/2009-2014 of 17 June 2011, the DEPBS
received a final three months extension which prolonged its applicability until
30 September 2011. As no further extension was published subsequently, the
DEPBS has effectively been withdrawn from 30 September 2011 onwards. Therefore
it was necessary to verify whether measures could be imposed with regard to
Article 15(1) of the basic Regulation.

(48)     The
GOI explained to the Commission that upon withdrawal of the DEPBS scheme,
companies could opt for other duty exemption/remission schemes defined under
chapter 4 of FTP 09-14, i.e. the Advance Authorisation Scheme (AAS) or the Duty
Drawback Scheme (DDS).

(49)     The
investigation revealed that both sampled companies started availing of DDS
immediately after the DEPBS was withdrawn. It must
be noted that DDS has been introduced in 1995 and coexisted with DEPBS during
the three first quarters of the RIP and for a number of years before the RIP. DDS
could however not be availed simultaneously with DEPBS on the same exports. During
the first three quarters of the RIP, the DDS rate amounted to 2.2% with a cap
of 1.5 INR/kg, making the DDS less generous and hence less attractive than the
DEPBS. It must be noted that the GOI took steps to organise a smooth transition
from DEPBS to DDS, as demonstrated in circular No. – 42 /2011-Customs, dated
22/09/2011. In this circular it is explained that "the [duty] drawback
schedule this year incorporates items which were hitherto under the DEPB[S]
scheme". The same circular states that for sectors operating under DEPBS,
it "has been decided to provide a smooth transition for items in these sectors
while incorporating these in the drawback schedule. As a transitory
arrangement, these items will suffer a modest reduction from their DEPB[S]
rates, ranging from 1% to 3% for most items." In other words, this
circular indicates that the duty drawback rates in force w.e.f. 01/10/2011 were
determined so that they would confer a similar benefit as the withdrawn DEPBS.

(50)     As
of 1 October, the DDS rate applicable to the product concerned was increased
from 2.2% to 5.5% of FOB value and the associated cap was raised from 1.5
INR/kg to 5.5 INR/kg. This new rate was found to confer similar levels of
subsidiation as the DEPBS was until the 30 September 2011 with its 8% rate and
58 INR/kg cap. In function of PET prices prevailing during the RIP, the DEPBS
cap was generally applicable resulting in a theoretical benefit of 4.64 INR/kg
or 5.8%. In the case of the DDS, the cap was not applicable so that the
theoretical benefit amounted to 5.5%.

(51)     The investigation confirmed
the reasoning of the previous recital. The average annualised subsidy margins
of the sampled companies were 5.5% and 6% for DEPB and DDS, respectively.

(52)     A
comparison of both schemes also shows that they share numerous implementation
characteristics.

(53)     Recitals (47)(48) to (51) above
demonstrate that, even though the DEPBS scheme was withdrawn, the underlying
benefits continued to be conferred without discontinuation and at an almost
identical level by providing a seamless transition to the duty drawback scheme.
For that reason, it is concluded that the subsidies have not been withdrawn
within the meaning of Article 15(1) and that DEPBS is countervailable.

(54)     Following the disclosure of
the essential facts and considerations, one exporting producer argued that the
DEPBS has been withdrawn and therefore should not be countervailed. In reply to
this, it is noted that, as also explained above in recital (47) above, the
DEPBS has ceased on 30 September 2012. However, the subsidisation continued and
exporters have the possibility as an alternative to the DEPBS to apply for and
receive benefits under e.g. the DDS or the AAS. Consequently, this argument was
rejected.

(f)
Calculation of the subsidy amount

(55)     In accordance with Articles
3(2) and 5 of the basic Regulation, the amount of countervailable subsidies was
calculated in terms of the benefit conferred on the recipient, which is found
to exist during the review investigation period. In this regard, it was
considered that the benefit is conferred on the recipient at the time when an
export transaction is made under this scheme. At that moment, the GOI is liable
to forego the customs duties, which constitutes a financial contribution within
the meaning of Article 3(1)(a)(ii) of the basic Regulation. Once the customs
authorities issue an export shipping bill which shows, inter alia, the amount
of DEPBS credit which is to be granted for that export transaction, the GOI has
no discretion as to whether or not to grant the subsidy. In the light of the
above, it is considered appropriate to assess the benefit under the DEPBS as
being the sums of the credits earned on export transactions made under this
scheme during the RIP.

(56)     Where justified claims were
made, fees necessarily incurred to obtain the subsidy were deducted from the
credits so established to arrive at the subsidy amounts as numerator, pursuant
to Article 7(1)(a) of the basic Regulation. In accordance with Article 7(2) of
the basic Regulation these subsidy amounts have been allocated over the total
export turnover of the product concerned during the RIP as appropriate
denominator, because the subsidy is contingent upon export performance and it
was not granted by reference to the quantities manufactured, produced, exported
or transported.

(57)     Based on the above, the
subsidy rates established in respect of this scheme for the sampled companies
amounted to 3.78% and 4.42% respectively.

3.           Duty Drawback Scheme
('DDS')

(a)
Legal Basis

(58)     The detailed description of
the DDS is contained in the Custom & Central Excise Duties Drawback Rules,
1995 as amended by successive notifications.

(b)
Eligibility

(59)     Any manufacturer-exporter
or merchant-exporter is eligible for this scheme.

(c)
Practical implementation

(60)     An eligible exporter can
apply for drawback amount which is calculated as a percentage of the FOB value
of products exported under this scheme. The drawback rates have been
established by the GOI for a number of products, including the product
concerned. They are determined on the basis of the average quantity or value of
materials used as inputs in the manufacturing of a product and the average
amount of duties paid on inputs. They are applicable regardless of whether
import duties have actually been paid or not. The DDS rate for the product
concerned during the RIP was 5.5% of FOB value, subject to a cap of 5.5 INR/kg.

(61)     To be eligible to benefits
under this scheme, a company must export. At the moment when shipment details
are entered in the Customs server (ICEGATE), it is indicated that the export is
taking place under the DDS and the DDS amount is fixed irrevocably. After the
shipping company has filed the Export General Manifest (EGM) and the Customs
office has satisfactorily compared that document with the shipping bill data,
all conditions are fulfilled to authorise the payment of the drawback amount by
either direct payment on the exporter's bank account or by draft.

(62)     The exporter also has to
produce evidence of realisation of export proceeds by means of a Bank
Realisation Certificate (BRC). This document can be provided after the drawback
amount has been paid but the GOI will recover the paid amount if the exporter
fails to submit the BRC within a given delay.

(63)     The drawback amount can be
used for any purpose.

(64)     It was found that in
accordance with Indian accounting standards, the duty drawback amount can be
booked on an accrual basis as income in the commercial accounts, upon
fulfilment of the export obligation.

(65)     The sampled companies were
found to use the DDS during the last quarter of the RIP.

(d)
Conclusion on DDS

(66)     The DDS provides subsidies
within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic
Regulation. A duty drawback amount is a financial contribution by the GOI. In
addition, the duty drawback amount confers a benefit upon the exporter, because
it improves its liquidity.

(67)     Furthermore, the DDS is
contingent in law upon export performance, and is therefore deemed to be
specific and countervailable under Article 4(4), first subparagraph, point (a)
of the basic Regulation.

(68)     This scheme cannot be
considered as permissible duty drawback system or substitution drawback system
within the meaning of Article 3(1)(a)(ii) of the basic Regulation. It does not
conform to the strict rules laid down in Annex I point (i), Annex II
(definition and rules for drawback) and Annex III (definition and rules for
substitution drawback) of the basic Regulation.

(69)     There is no system or
procedure in place to confirm which inputs are consumed in the production
process of the exported product or whether an excess payment of import duties
occurred within the meaning of point (i) of Annex I and Annexes II and III of
the basic Regulation. Lastly, an exporter is eligible for the DDS benefits
regardless of whether it imports any inputs at all. In order to obtain the
benefit, it is sufficient for an exporter to simply export goods without
demonstrating that any input material was imported. Thus, even exporters which
procure all of their inputs locally and do not import any goods which can be
used as inputs are still entitled to benefit from the DDS.

(70)     This is confirmed by GOI's
circular n° 24/2001 which clearly states that "[duty drawback rates] have
no relation to the actual input consumption pattern and actual incidence
suffered on inputs of a particular exporter or individual consignments
[...]" and instructs regional authorities that "no evidence of actual
duties suffered on imported or indigenous nature of inputs [...] should be
insisted upon by the field formations along with the [drawback claim] filed by
exporters".

(71)     In view of the above, it is
concluded that DDS is countervailable.

(e)
Calculation of the subsidy amount

(72)     In accordance with Articles
3(2) and 5 of the basic Regulation, the amount of countervailable subsidies was
calculated in terms of the benefit conferred on the recipient, which is found
to exist during the review investigation period. In this regard, it was
considered that the benefit is conferred on the recipient at the time when an
export transaction is made under this scheme. At this moment, the GOI is liable
to the payment of the drawback amount, which constitutes a financial
contribution within the meaning of Article 3(1)(a)(ii) of the basic Regulation.
Once the customs authorities issue an export shipping bill which shows, inter
alia, the amount of drawback which is to be granted for that export
transaction, the GOI has no discretion as to whether or not to grant the
subsidy. In the light of the above, it is considered appropriate to assess the
benefit under the DDS as being the sums of the drawback amounts earned on
export transactions made under this scheme during the RIP.

(73)     Where justified claims were
made, fees necessarily incurred to obtain the subsidy were deducted from the
credits so established to arrive at the subsidy amounts as numerator, pursuant
to Article 7(1)(a) of the basic Regulation. In accordance with Article 7(2) of
the basic Regulation these subsidy amounts have been allocated over the total
export turnover of the product concerned during the review investigation period
as appropriate denominator, because the subsidy is contingent upon export
performance and it was not granted by reference to the quantities manufactured,
produced, exported or transported.

(74)     Based on the above, the
subsidy rates established in respect of this scheme for the sampled companies concerned
amounted to 1.65% and 1.32%, respectively.

4.           Focus Market Scheme (FMS)

(a)
Legal basis

(75)     The detailed description of
FMS is contained in paragraph 3.14 of FTP 09-14 and in paragraph 3.8 of HOP I
09-14.

(b)
Eligibility

(76)     Any manufacturer-exporter
or merchant-exporter is eligible for this scheme.

(c)
 Practical implementation

(77)     Under this scheme exports
of all products to countries notified under tables 1 and 2 of Appendix 37(C) of
HOP I 09-14 are entitled to duty credit equivalent to 3% of the FOB value. As
of 1 April 2011, exports of all products to countries notified under table 3 of
Appendix 37(C) ('Special Focus Markets') are entitled to a duty credit
equivalent to 4% of the FOB value. Certain types of export activities are excluded
from the scheme, e.g. exports of imported goods or transhipped goods, deemed
exports, service exports and export turnover of units operating under special
economic zones/export operating units. Also excluded from the scheme are
certain types of products, e.g. diamonds, precious metals, ores, cereals, sugar
and petroleum products.

(78)     The
duty credits under FMS are freely transferable and valid for a period of 24
months from the date of issue of the relevant credit entitlement certificate.
They can be used for payment of custom duties on subsequent imports of any
inputs or goods including capital goods.

(79)     The credit entitlement
certificate is issued from the port from which the exports have been made and
after realisation of exports or shipment of goods. As long as the applicant
provides to the authorities copies of all relevant export documentation (e.g.
export order, invoices, shipping bills, bank realisation certificates), the GOI
has no discretion over the granting of the duty credits.

(80)     It was found that the sampled
companies used this scheme during the RIP.

(d)
Conclusion on FMS

(81)     The FMS provides subsidies
within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic
Regulation. A FMS duty credit is a financial contribution by the GOI, since the
credit will eventually be used to offset import duties, thus decreasing the
GOI’s duty revenue which would be otherwise due. In addition, the FMS duty
credit confers a benefit upon the exporter, because it improves its liquidity.

(82)     Furthermore, FMS is
contingent in law upon export performance, and therefore deemed to be specific
and countervailable under Article 4(4), first subparagraph, point (a) of the
basic Regulation.

(83)     This scheme cannot be
considered a permissible duty drawback system or substitution drawback system
within the meaning of Article 3(1)(a)(ii) of the basic Regulation. It does not
conform to the strict rules laid down in Annex I point (i), Annex II
(definition and rules for drawback) and Annex III (definition and rules for
substitution drawback) of the basic Regulation. An exporter is under no
obligation to actually consume the goods imported free of duty in the
production process and the amount of credit is not calculated in relation to
actual inputs used. There is no system or procedure in place to confirm which
inputs are consumed in the production process of the exported product or
whether an excess payment of import duties occurred within the meaning of point
(i) of Annex I and Annexes II and III of the basic Regulation. An exporter is
eligible for FMS benefits regardless of whether it imports any inputs at all.
In order to obtain the benefit, it is sufficient for an exporter to simply
export goods without demonstrating that any input material was imported. Thus, even
exporters which procure all of their inputs locally and do not import any goods
which can be used as inputs are still entitled to benefit from FMS. Moreover,
an exporter can use FMS duty credits in order to import capital goods although
capital goods are not covered by the scope of permissible duty drawback
systems, as set out in Annex I point (i) of the basic Regulation, because they
are not consumed in the production of the exported products.

(e)
Calculation of the subsidy amount

(84)     The amount of countervailable
subsidies was calculated on the basis of the benefit conferred on the
recipient, which is found to exist during the RIP as booked by the cooperating
exporting producer on an accrual basis as income at the stage of export
transaction. In accordance with Article 7(2) and 7(3) of the basic Regulation
this subsidy amount (nominator) has been allocated over the export turnover
during the RIP as appropriate denominator, because the subsidy is contingent
upon export performance and it was not granted by reference to the quantities
manufactured, produced, exported or transported.

(85)     The subsidy rate
established with regard to this scheme during the RIP for the sampled companies
concerned amounted to respectively 0.19% and 0.87%.

5.           Status Holder Incentive
Scrip (SHIS)

(a)
Legal basis

(86)     The detailed description of
SHIS is contained in chapter 3.16 of FTP 09-14 and in paragraph 3.10 of HOP I
09-14. The detailed description of the Status categories is contained in
paragraphs 3.10.1 to 3.10.4 of FTP 09-14 and in paragraphs 3.1 to 3.5 of HOP I
09-14.

(b)
Eligibility

(87)     Manufacturer-exporters or
merchant-exporters which are recognised as so-called Status holders are
eligible for this scheme.

(c)
Practical implementation

(88)     Merchant as well as
manufacturer exporters are eligible for Status. Depending on their export
performance during current year plus a number of previous years, applicants are
granted one of the following statuses: Export House, Star Export House, Trading
House, Start Trading House, Premier Trading House.

(89)     Under the SHIS, status
holders are entitled to a duty credit equivalent to 1% of the FOB value of
exports in sectors specified in paragraph 3.16.4 of FTP 09-14 i.e. leather
(excluding finished leather), textile and jute sector, handicrafts, engineering
sector (excluding some sub-sectors), plastics and basic chemicals (excluding
pharmaceutical products). The product concerned, being a type of plastic, is
covered by the scheme.

(90)     The SHIS duty credits are
not transferrable and must be used to pay duty on import of capital goods used
to manufacture products falling into one of the covered sectors.

(91)     In
case an applicant has availed Zero Duty EPCG during a year, it shall not be
eligible for SHIS for export made that year.

(92)     The scheme was introduced
in 2009 for exports made during 2009-2010 and 2010-2011 and has been extended
on a yearly basis since then. The last extension (cfr. notification No 07/2012
– Customs dated 9 March 2012) prolonged the validity of the scheme until 31
March 2013.

(93)     It was found that in
accordance with Indian accounting standards, the SHIS duty credit can be booked
on an accrual basis as income in the commercial accounts, upon fulfilment of
the export obligation.

(94)     The investigation revealed that
one sampled company used this scheme during the RIP while the other one was not
eligible as a result of the provision described in recital (90).

(d)
Conclusion on SHIS

(95)     The SHIS provides subsidies
within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation.
A SHIS duty credit is a financial contribution by the GOI, since the credit
will eventually be used to offset import duties, thus decreasing the GOI’s duty
revenue which would be otherwise due. In addition, the SHIS duty credit confers
a benefit upon the exporter, because it improves its liquidity.

(96)     Furthermore, SHIS is
contingent in law upon export performance, and therefore deemed to be specific
and countervailable under Article 4(4), first subparagraph, point (a) of the
basic Regulation.

(97)     This scheme cannot be
considered a permissible duty drawback system or substitution drawback system
within the meaning of Article 3(1)(a)(ii) of the basic Regulation. It does not
conform to the strict rules laid down in Annex I point (i), Annex II (definition
and rules for drawback) and Annex III (definition and rules for substitution
drawback) of the basic Regulation. The duty credit will eventually be used to
pay duties on imports of capital goods which are not covered by the scope of
permissible duty drawback as set out in Annex I point (i) of the basic
Regulation, because they are not consumed in the production of the exported
products.

(e)
Calculation of the subsidy amount

(98)     The amount of
countervailable subsidies was calculated on the basis of the benefit conferred
on the recipient, which is found to exist during the RIP as booked by the
cooperating exporting producer on an accrual basis as income at the stage of the
export transaction. In accordance with Article 7(2) and 7(3) of the basic
Regulation this subsidy amount (nominator) has been allocated over the export
turnover during the RIP as appropriate denominator, because the subsidy is
contingent upon export performance and it was not granted by reference to the
quantities manufactured, produced, exported or transported.

(99)     The subsidy rate
established with regard to this scheme during the RIP for the sole sampled company
using that scheme amounted to 1%.

6.           Export Promotion Capital
Goods scheme (‘EPCGS’)

(a)
Legal basis

(100)   The detailed description of
EPCGS is contained in chapter 5 of FTP 09-14 as well as in chapter 5 of HOP I
09-14.

(b)
Eligibility

(101)   Manufacturer-exporters,
merchant-exporters “tied to” supporting manufacturers and service providers are
eligible for this scheme.

(c)
Practical implementation

(102)   Under the condition of an
export obligation, a company is allowed to import capital goods (new and
second-hand capital goods up to 10 years old) at a reduced rate of duty. To
this end, the GOI issues, upon application and payment of a fee, an EPCGS
licence. The scheme provides for a reduced import duty rate of 3% applicable to
all capital goods imported under the scheme. In order to meet the export
obligation, the imported capital goods must be used to produce a certain amount
of export goods during a certain period. Under FTP 09-14 the capital goods can
be imported with a 0% duty rate under the EPCGS but in such case the time
period for fulfilment of the export obligation is shorter.

(103)   The EPCGS licence holder can
also source the capital goods indigenously. In such case, the indigenous
manufacturer of capital goods may avail himself of the benefit for duty free
import of components required to manufacture such capital goods. Alternatively,
the indigenous manufacturer can claim the benefit of deemed export in respect
of supply of capital goods to an EPCGS licence holder.

(d)
Conclusion on EPCGS

(104)   The
EPCGS provides subsidies within the meaning of Article 3(1)(a)(ii) and Article
3(2) of the basic Regulation. The duty reduction constitutes a financial
contribution by the GOI, since this concession decreases the GOI’s duty revenue
which would be otherwise due. In addition, the duty reduction confers a benefit
upon the exporter, because the duties saved upon importation improve the
company’s liquidity.

(105)   Furthermore, EPCGS is
contingent in law upon export performance, since such licences cannot be
obtained without a commitment to export. Therefore it is deemed to be specific
and countervailable under Article 4(4), first subparagraph, point (a) of the
basic Regulation.

(106)   EPCGS cannot be considered a
permissible duty drawback system or substitution drawback system within the
meaning of Article 3(1)(a)(ii) of the basic Regulation. Capital goods are not
covered by the scope of such permissible systems, as set out in Annex I point
(i), of the basic Regulation, because they are not consumed in the production
of the exported products.

(e)
Calculation of the subsidy amount

(107)   The subsidy amount was
calculated, in accordance with Article 7(3) of the basic Regulation, on the
basis of the unpaid customs duty on imported capital goods spread across a
period which reflects the normal depreciation period of such capital goods in
the industry concerned. The amount so calculated, which is attributable to the RIP,
has been adjusted by adding interest during this period in order to reflect the
full value of the benefit over time. The commercial interest rate during the
investigation period in India was considered appropriate for this purpose.
Where justified claims were made, fees necessarily incurred to obtain the
subsidy were deducted in accordance with Article 7(1)(a) of the basic
Regulation.

(108)   In accordance with Article
7(2) and 7(3) of the basic Regulation, this subsidy amount has been allocated
over the appropriate export turnover during the RIP as the appropriate
denominator because the subsidy is contingent upon export performance and was
not granted by reference to the quantities manufactured, produced, exported or
transported.

(109)   The subsidy rate established
with regard to this scheme during the RIP for the sampled companies concerned amounted
to respectively 0.55% and 0.56%.

7.           Advance Authorisation
Scheme ('AAS')

(110)   It was found that only one sampled
company availed of this scheme during the RIP. However, the investigation
established that the benefit obtained by the company was insignificant and,
thus AAS was not analysed further.

8.           West Bengal Incentive
Scheme 1999 ('WBIS 1999')

(a)
 Legal basis

(111)   The detailed description of
this scheme as applied by the Government of West Bengal ('GOWB') is set out in
Notification No 580-CI/H of 22 June 1999 of the GOWB Commerce & Industries
Department.

(b)
Eligibility

(112)   Companies setting up a new
industrial establishment or making a large-scale expansion of an existing
industrial establishment in backward areas are eligible to avail benefits under
this scheme. Nevertheless, an exhaustive list of ineligible industries
(negative list of industries) exists preventing companies in certain fields of
operations from benefiting from the incentives.

(c)
Practical implementation

(113)   The State of West Bengal
grants to eligible industrial enterprises incentives in the form of a number of
benefits, including an exemption of central sales tax ('CST') and a remission
of central value added tax ('CENVAT') on sales of finished goods, in order to
encourage the industrial development of economically backward areas within this
State.

(114)   Under this scheme, companies
must invest in backward areas. These areas, which represent certain territorial
units in West Bengal are classified according to their economic development
into different categories while at the same time there are developed areas
excluded from the application of the incentive schemes. The main criteria to
establish the amount of the incentives are the size of the investment and the
area in which the enterprise is or will be located.

(115)   It was found that one sampled
company availed of this scheme during the RIP.

(d)
Conclusion

(116)   This scheme provides
subsidies within the meaning of Articles 3(1)(a)(ii) and 3(2) of the basic
Regulation. It constitutes a financial contribution by the GOWB, since the
incentives granted, in the present CST exemption and CENVAT remission on sales
of finished goods, decrease tax revenue which would be otherwise due. In
addition, these incentives confer a benefit upon a company, because they
improve its financial situation since taxes otherwise due are not paid.

(117)   Furthermore, this scheme is
regionally specific in the meaning of Articles 4(2)(a) and 4(3) of the basic
Regulation since it is only available to certain companies having invested
within certain designated geographical areas within the jurisdiction of the
State concerned. It is not available to companies located outside these areas
and, in addition, the level of benefit is differentiated according to the area
concerned.

(118)   The WBIS 1999 is therefore
countervailable.

(e)
Calculation of the subsidy amount

(119)   The
subsidy amount was calculated on the basis of the amount of the sales tax and
CENVAT on sales of finished goods normally due during the review investigation
period but which remained unpaid under this scheme. In accordance with Article
7(2) of the basic Regulation, the amount of subsidy (numerator) have then been
allocated over total sales during the review investigation period as
appropriate denominator, because the subsidy is not export contingent and it
was not granted by reference to the quantities manufactured, produced, exported
or transported. The subsidy rate obtained amounted to 1,36%.

9.           Amount of countervailable
subsidies

(120)   The amount of
countervailable subsidies in accordance with the provisions of the basic
Regulation, expressed ad valorem, for the sampled exporting producers
was 7.53% and 8.17%, respectively.

SCHEME || DEPB || DDS || FMS || SHIS || EPCGS || WBIS || Total

COMPANY || % || % || % || % || % || % || %

Dhunseri Petrochem & Tea Limited || 3.78 || 1.65 || 0.19 || nil || 0.55 || 1.36 || 7.53

Reliance Industries Limited || 4.42 || 1.32 || 0.87 || 1.0 || 0.56 || Nil || 8.17

10.         Conclusions on the
likelihood of a continuation or recurrence of subsidisation

(121)   In accordance with Article
18(2) of the basic Regulation, it was examined whether the expiry of the
measures in force would be likely to lead to a continuation or recurrence of
subsidisation.

(122)   As set out under recitals (26)
to (118) above, it was established that during the RIP Indian exporters of the
product concerned continued to benefit from countervailable subsidisation by
the Indian authorities.

(123)   The subsidy schemes give
recurring benefits and there is no indication that these benefits will be
phased out in the foreseeable future. Moreover, each exporter is eligible to
several of the subsidy schemes.

(124)   It was also examined whether
exports to the Union would be made in significant volumes should the measures
be lifted.

(125)   India is a large producer of the product concerned.
On the basis of data collected during the investigation, India had a production capacity of about 700,000-900,000 tonnes during the RIP and
expansion plans bringing the total country capacity to 1,600,000 – 1,800,000
tonnes by 2014. As a result, the excess of capacity over domestic demand is
estimated to reach about 600,000-700,000 tonnes in 2014, which would represent 21-25%
of the total Union consumption in RIP.

(126)   Under
these circumstances, Indian producers of the product concerned are heavily
dependent on export sales and there is a likelihood that exports volumes to the
Union, which were already significant during the RIP, would increase should the
measures be repealed.

(127)   An exporting producer submitted
that the excess capacity would decrease after 2014 and therefore the excess
capacity situation would only be temporary. It is noted that the alleged
decrease of excess capacity after 2014 was found in line with the projections
of the market intelligence report Therefore it was concluded that this
submission was not of a nature to modify the analysis with regard to the
development of excess capacities.

(128)   After the disclosure, an
exporting producer claimed that important temporary excess capacities were
inevitable due to the fact that generally production capacity increases can be
done only in large increments due to the minimum size of modern PET plants. In
reply to this it should be noted that during RIP and the following year,
production capacity extensions in the range of at least 150,000 to 200,000
tonnes were made. It follows that the invoked reasoning cannot justify alone
the excess capacity available for exports quoted in recital (125). In any
event, in this context the cause of the excess capacity available for exports
is irrelevant. Therefore the claim was rejected.

(129)   Some parties claimed that
the excess capacity available for exports developing in India could be absorbed also by other third countries and that therefore the excess
capacity available for exports as calculated by the Commission was not properly
assessed. It was not assume in any way that the entirety of any excess capacity
available for exports would be directed to the Union. Therefore the claim was rejected.

(130)   In view of the above, it can
be concluded that there is a likelihood of a continuation of subsidisation.

D. DEFINITION OF THE UNION INDUSTRY

1.           Union production and Union
industry

(131)   The like product is
manufactured by 13 known producers in the Union. They represent the Union
industry within the meaning of Articles 9(1) of the basic Regulation and will
thereafter be referred as 'the Union industry'.

(132)   Twelve known Union producers,
represented by the complainant in the present case, cooperated and supported
the investigation. One more known Union producer did not cooperate in the
present review.

(133)   All available information
concerning Union industry, such as questionnaire replies, Eurostat and request
for review, was used in order to establish the total Union production for the RIP.

(134)   The Union
market for PET is characterised by a relatively high number of producers,
belonging usually to bigger groups with headquarters outside the Union. Between 2000 and 2012 the Union PET industry
has undergone through several transitions. The market is in a process of
consolidation with a number of recent takeovers and closures. New products,
such as recycled PET and bio PET continue to be developed together with a
relatively recent spinoff of a recycling industry.

(135)   Following the disclosure
some parties argued that the description of the situation of the Union industry
was inaccurate as five producers were in fact belonging to one large
transnational group and another three producers were related to PET packaging
companies. None of these facts contradict the description provided in recital (134)
explicitly stating that the Union producers are usually belonging to bigger
groups as disclosed. The impact of this concentration is addressed in recital (207)
below. The assessment of the impact of captive market is analysed in recitals (202)
to (204) below.

(136)   As indicated above, given
the relatively high number of cooperating Union producers a sample of four Union
producers was selected, representing over 50% of the production and sales of
the total Union production of the like product in the RIP.

E. SITUATION ON THE UNION MARKET

1.           Union Consumption

(137)   Union consumption was
established on the basis of the sales volumes of the Union industry on the
Union market, the import volumes data obtained from Eurostat and, concerning
the non-cooperating Union producer, from estimations based on the review
request.

(138)   After an initial increase in
2009 and 2010, the consumption showed a slight decrease of 2% in the RIP as
compared to 2008, totalling to 2,802 million tonnes in the RIP.

Table 1

Consumption

|| 2008 || 2009 || 2010 || RIP

Volume (tonnes) || || || ||

Consumption || 2,868,775 || 2,934,283 || 2,919,404 || 2,802,066

Index || 100 || 102 || 102 || 98

Source: Questionnaire replies, Eurostat and review request ||

2.           Volume, market share and
prices of imports from India

(139)   Despite the measures in
place, the imports from India more than doubled over the period considered departing
from 46,313 tonnes in 2008 and reaching 96,678 tonnes in the RIP.

(140)   The market share of India rose accordingly from 1.6% in 2008 to 3.5% in the RIP, reaching a level significantly
above the market share established in the last expiry review (0.3%).

(141)   The average price stood at 1,285
EUR/tonne in the RIP. This reflects a 22% price increase over the period
considered, which was acquired in the RIP after an initial decline of 21% in
2009.

Table 2

Imports from India

|| 2008 || 2009 || 2010 || RIP

Volume of imports (tonnes) || 46,313 || 44,482 || 83,691 || 96,678

Index (2008=100) || 100 || 96 || 181 || 209

Average price || 1,054 || 834 || 1,031 || 1,285

Index (2008=100) || 100 || 79 || 98 || 122

Market share of imports || 1.6% || 1.5% || 2.9% || 3.5%

Source: Eurostat

3.           Imports from other third
countries

(a)
Imports from Thailand, Taiwan, Malaysia, Indonesia

(142)   As mentioned above, an
anti-dumping expiry review concerning imports from India, Indonesia, Malaysia, Taiwan and Thailand was conducted in parallel to the present investigation.

(143)   Imports from Indonesia, Malaysia, Taiwan and Thailand increased by 56% over the period considered despite a
decline of 59% until 2010. Nevertheless, the total import volumes remained
below de minimis level.

(144)   The respective market share
increased accordingly from 0.7% in 2008 to 1.1% in the RIP.

(145)   The average price amounted
to 1,310/EUR/tonne in the RIP, 1.5% below the average unit price of the Union
industry. This reflects a 27% price increase over the period considered, which
was acquired in the RIP after an initial decline of 18% in 2009.

Table 3

Imports from Indonesia, Malaysia, Taiwan and Thailand

|| 2008 || 2009 || 2010 || RIP

Volume of imports from Indonesia, Malaysia, Taiwan and Thailand (tonnes) || 19,078 || 12,127 || 7,762 || 29,836

Index (2008 = 100) || 100 || 64 || 41 || 156

Market share of imports from Indonesia, Malaysia, Taiwan and Thailand || 0.7% || 0.4% || 0.3% || 1.1%

Index (2008 = 100) || 100 || 62 || 40 || 160

Price of imports (EUR/tonne) || 1,030 || 843 || 1,055 || 1,310

Index (2008 = 100) || 100 || 82 || 102 || 127

Source: Eurostat

(b)
Imports from China, United Arab Emirates (UAE), Iran and Pakistan

(146)   Imports from other third
countries with anti-dumping measures in place decreased by 69% over the period
considered after an increase of 49% in 2009. Only imports from China remained stable.

(147)   The market share of the
countries in question decreased from 8.2% in 2008 to 2.6% in the RIP, including
mainly the UAE (1.7% in RIP) and China (0.6% in RIP).

(148)   The average price amounted
to 1,258 EUR/tonne in the RIP, 5.5% below the average unit price of the Union
industry. This reflects a 24% increase over the period considered which was
acquired in the RIP after an initial decline of 22% in 2009.

Table 4

Imports from China, the UAE, Iran and Pakistan

|| 2008 || 2009 || 2010 || RIP

Volume of imports from China, the UAE, Iran and Pakistan (tonnes) || 235,913 || 351,798 || 188,776 || 72,054

Index (2008 = 100) || 100 || 149 || 80 || 31

Market share of imports from China, the UAE, Iran and Pakistan || 8.2% || 12.0% || 6.5% || 2.6%

Index (2008 = 100) || 100 || 146 || 79 || 31

Price of imports (EUR/tonne) || 1,016 || 789 || 949 || 1,258

Index (2008 = 100) || 100 || 78 || 93 || 124

Source: Eurostat || || || ||

(c)
Imports from other third countries
without any measures

(149)   Volumes
of imports from other third countries without any measures including Oman,
South Korea, Russia, Mexico and Saudi Arabia increased by 59% over the period
considered, after a growth of 71% in 2009. Between 2009 and the RIP, Oman became the largest exporting country in
the Union.

(150)   The market share of the
countries in question rose from 9.7% in 2008 to 15.8% in the RIP, mainly due to
the gain of 4.3% of imports from Oman. The market share of South Korea stood at 4% in the RIP, 5% below its highest level reached in 2009.

(151)   The average price amounted
to 1,273 EUR/tonne, 4.3% below the average unit price of the Union industry.
This reflects a 10% increase over the period considered which was acquired in
2010 and in the RIP after an initial decline of 24% in 2009. The average price
of imports from Oman stood at 1,310 EUR/tonne in the RIP, 1.5% below the
average unit price of the Union industry. The average price of imports from South Korea stood at 1,294 EUR/tonne, 2.7% below the average unit price of the Union
industry.

Table 5

Imports from other third countries

|| 2008 || 2009 || 2010 || RIP

Volume of imports from other third countries (tonnes) || 279,188 || 478,570 || 469,753 || 442,692

Index (2008 = 100) || 100 || 171 || 168 || 159

Market share of imports from other third countries || 9.7% || 16.3% || 16.1% || 15.8%

Index (2008 = 100) || 100 || 168 || 165 || 162

Price of imports (EUR/tonne) || 1,156 || 879 || 997 || 1,273

Index (2008 = 100) || 100 || 76 || 86 || 110

Main exporters (tonnes)

Oman || 0 || 52,632 || 95,646 || 120,286

South Korea || 177,341 || 254,451 || 183,801 || 114,346

Russia || 546 || 546 || 3 || 50,427

Mexico || 2,650 || 1,879 || 29,039 || 29,409

Saudi Arabia || 230 || 20,454 || 50,108 || 24,756

Others || 98,422 || 148,609 || 111,156 || 103,468

Source: Eurostat

4.           Economic situation of the
Union industry

(152)   Pursuant to Article 8(4) of
the basic Regulation all economic factors and indices having a bearing on the
state of the Union industry during the period considered have been examined.

(153)   For the purpose of the
injury analysis, the injury indicators have been established at the following
two levels

–
the macro-economic indicators (production, production
capacity, capacity utilisation, sales volume, market share, growth, employment,
productivity, magnitude of subsidy margins and recovery from the effects of
past subsidisation) were assessed at the level of the whole Union production
for all Union producers, on the basis of the information collected from the
Union industry, the review request as well as publicly-available statistics;

–
micro-economic indicators (stocks, average unit
prices, wages, profitability, return on investments, cash flow, ability to
raise capital and investments) was carried out for the sampled Union producers
on the basis of the information they submitted.

(154)   One sampled Union producer
divested one of its production facilities in June 2010. The latter was acquired
by another Union producer. Since the analysis of macro-economic indicators is based
on data collected from all Union producers the divestment had no impact on the scope
or individual indicators of the injury analysis.

(155)   As a
preliminary point to the analysis it should be explained that certain global
economic events in late 2010 and early 2011 had an impact on the situation on the
Union market, in particular on the prices and sales volumes of the like product.
In this period the cotton supply fell resulting in an increased demand for
polyester fibre on the Asian market. PET and polyester fibre are largely
dependent upstream on the same raw material, i.e. purified terephthalic acid
(PTA). The increased demand for polyester fibre resulted in insufficient supply
of PTA, pushing the prices of PET up. Since the producers of PET in the Middle
East also depend on PTA from Asia, this caused sudden fall in imports of PET in
the Union. At the same
time, the main PTA suppliers in the Union declared a 'force majeure'
resulting in additional restrictions of the domestic PET production.

4.1.        Comments of the parties

(156)   Some parties challenged the validity
of the injury analysis on the grounds that it was based on deficient
information, which in turn also affected the rights of defence of interested
parties. In particular, the below-mentioned arguments were raised.

(157)   Some parties claimed that
the information collected from Union producers did not comply with the instructions
for completion of the questionnaire, which requested data from different
companies not to be aggregated. It was therefore claimed that the collected
information was inaccurate and incomplete given that the reported figures were
aggregated per sampled entity. It is to be noted that the information was duly collected
and verified on-spot. The information collected was found to provide
sufficiently accurate picture of the Union industry and therefore the above-mentioned
claim had to be rejected. Following disclosure the parties reiterated their
claim. No new arguments or evidence were presented. Same parties reiterated
their claim that the data provided by one sampled company were incomplete as
they did not relate to the entire group but selected entity within the group.
This comment was addressed at the sampling stage as explained in recital (18)
above.

(158)   The same parties argued that
the Commission attempted to fix the claimed insufficiencies of the collected
information by sending additional questionnaires. In this respect it should be
clarified that the Commission indeed sent additional questionnaires, but
addressed them only to the non-sampled Union producers in order to collect
information on macro-economic indicators relevant to the injury assessment
therefore this was done to supplement the information provided by the sampled
Union producers. Following disclosure some parties reiterated the claim without
bringing any new arguments or presenting new evidence. The claim of the parties
had to be therefore dismissed.

(159)   In addition, the same parties
also claimed that the information provided by the sampled producers was
contrary to the obligations in Article 29 of the basic Regulation because
information which was not confidential in nature had been provided as
confidential information and thus excluded from the open file. In this respect
it is to be noted that the information was classified as limited in line with
the request of the submitting party. Upon the request of the parties the
confidentiality status of the submitted information was reconsidered and, where
appropriate, the information was reclassified as open for inspection by
interested parties after approval by the companies concerned. Also this claim was
therefore dismissed.

4.2.        Macro-economic indicators

(a)
Production

(160)   In
line with the loss of market share by the Union industry (discussed in recital (164)
below) the Union production decreased by 11% between 2008 and the RIP. The decline
of the Union production was only interrupted in 2010 when it raised in
comparison to 2009 but remained nevertheless 4% below its level of 2008. It
further decreased in the RIP.

Table 6

Total Union production

|| 2008 || 2009 || 2010 || RIP

Production (tonnes) || 2,327,169 || 2,107,792 || 2,239,313 || 2,068,717

Index (2008=100) || 100 || 91 || 96 || 89

Source: Questionnaire replies, review request || ||

(b)
Production capacity and capacity utilisation

(161)   The production capacity of
the Union industry decreased by 23% between 2008 and the RIP. This trend
relates to the closure of several manufacturing facilities which was partly
offset by the launch of new factories.

(162)   Capacity utilisation
increased from 75% in 2008 to 86% in the RIP. Increased capacity utilisation is
to be seen in the context of the restructuring efforts of the Union industry explained
in recital (134) above.

Table 7

Production capacity and capacity utilisation

|| 2008 || 2009 || 2010 || RIP

Production capacity (tonnes) || 3,118,060 || 2,720,326 || 2,625,244 || 2,393,516

Index || 100 || 87 || 84 || 77

Capacity utilisation || 75% || 77% || 85% || 86%

Index || 100 || 104 || 114 || 116

Source: Questionnaire replies, review request

(c)
Sales volume

(163)   The sales volume of the
Union industry on the Union market followed the same development as production,
with a contraction of 6% over the period considered.

Table 8

Total sales of the Union industry in the Union

|| 2008 || 2009 || 2010 || RIP

Sales (tonnes) || 2,288,283 || 2,047,305 || 2,169,423 || 2,160,807

Index || 100 || 89 || 95 || 94

Source: Questionnaire replies, review request

(d)
Market share

(164)   After
an initial drop of 13% in 2009, the Union industry regained part of the market
share lost by UAE, South Korea, Iran and Pakistan despite increasing volumes of
imports from India, Oman and other third countries (Russia, Mexico and Saudi
Arabia) over the same period. Overall, the market share of the Union industry declined
by 3% during the period considered.

Table 9

Union industry market share

|| 2008 || 2009 || 2010 || RIP

Union industry market share || 80% || 70% || 74% || 77%

Index || 100 || 87 || 93 || 97

Source: Questionnaire replies, review request and Eurostat

(e)
Growth

(165)   The market stagnated over
the period considered. There was no growth for the Union industry to benefit
from, on the contrary, despite the restructuring efforts, the Union industry
lost further market share to the growing imports, in particular, from the
countries without any measures. The slight decline of the consumption the RIP is
to be seen against the background of temporary shortage of the raw material
(PTA) in the Union as well as in the global market.

(f)
Employment and productivity

(166)   The employment level of the
Union industry showed a decrease of 41% between 2008 and the RIP. The decline
was constant over the period concerned, including in 2010 when the production
increased (see recital (160) above). In the light of the growing productivity,
this drop is a reflection of the restructuring efforts by a number of Union
producers.

(167)   Productivity
of the Union industry’s workforce, measured as output (tonnes) per person
employed per year, increased by 50% in the period considered. This reflects the
fact that production decreased at a slower pace than the employment level and
is an indication of increased efficiency of the Union industry. This is
particularly evident in 2010 when production increased while the employment
level decreased and the productivity was 37% higher than in 2008.

Table 10

Employment and productivity

|| 2008 || 2009 || 2010 || RIP

Number of employees || 2,060 || 1,629 || 1,449 || 1,218

Index || 100 || 79 || 70 || 59

Productivity (tonne/employee) || 1,130 || 1,294 || 1,545 || 1,698

Index || 100 || 115 || 137 || 150

Source: Questionnaire replies, review request || ||

(g)
Magnitude of the actual margin of subsidy

(168)   As concerns the impact on
the Union industry of the magnitude of the actual margin of subsidy of Indian
imports, given the price sensitivity of the market for this product, this
impact cannot be considered to be negligible. It should be noted that this
indicator is more relevant in the context of the likelihood of recurrence of
injury analysis. Should measures lapse, it is likely that subsidised imports
would come back at such volumes and prices that the impact of the magnitude of
the subsidy margin would be significant.

(h)
Recovery from the effects of past subsidisation

(169)   While the indicators
examined above show an improvement in some economic indicators of the Union
industry, further to the imposition of definitive countervailing measures in
2001, they also provide evidence that the Union industry is still vulnerable.

4.3.        Micro-economic indicators

(a)
Stocks

(170)   The level of stocks was 24% higher
in the RIP in relation with their levels in 2008. However, the stocks have
remained at previously established levels in relation to the output, i.e. between
5% and 6%.

Table 11

Stocks

|| 2008 || 2009 || 2010 || RIP

Closing stocks || 51,495 || 54,808 || 54,314 || 64,069

Index || 100 || 106 || 105 || 124

Source: Questionnaire replies

(b)
Price development

(171)   As
regards the price development, after an initial drop in 2009 (-16%), mainly
caused by the economic crisis, the prices came close to 2008 level in 2010.
This was followed by a sharp rise of the average unit price in the RIP,
bringing the increase over the period considered to 25%.

(172)   The
sudden price increase in the RIP should be read in the context of the
unexpected market developments at the end of 2010 and in the first quarter of
2011 on the cotton market. As mentioned above (recital (155) above), the record
cotton prices caused a switch to polyester fibre that competes for the same raw
material as PET. The increased demand for the raw material, in particular, PTA, pushed up the prices of PET in Asia and
Middle East with a spill over effect on the prices of PET in the Union. The price increase in the Union at that time was further amplified by the short term
scarcity of PTA in the Union due to the declared force majeure of one of
the PTA producers in the Union.

Table 12

Unit Sales Price in the Union

|| 2008 || 2009 || 2010 || RIP

Unit Sales Price in the Union (EUR/tonne) || 1,066 || 891 || 1,045 || 1,330

Index (2008 = 100) || 100 || 84 || 98 || 125

Source: Questionnaire replies || || || ||

(c)
Factors affecting sales prices

(173)   The
sales prices of PET normally follow the price trends of its main raw materials
(mainly PTA and monoethylene glycol — MEG) as they constitute up to 90% of the
total cost of PET. PTA is an oil derivative, the price of which fluctuates on
the basis of the price of crude oil. This causes high volatility of the prices
of PET.

(174)   In addition, PET competes
for the same raw material with polyester fibre, the production of which relies
to the same extent as PET on the availability of PTA. Since polyester fibre is
an alternative to cotton for the textile industry, the price of PET is
therefore also sensitive to the developments on the cotton market.

(d)
Wages

(175)   The average wages declined
by 7% over the period considered. This reduction occurred in the RIP and
amplified the productivity gains observed above (see recital (167) above).

Table 13

Wages

|| 2008 || 2009 || 2010 || RIP

Wages (average per person) || 54,512 || 56,014 || 54,876 || 50,784

Index || 100 || 103 || 101 ||  93

Source: Questionnaire replies

(e)
Profitability and return on investment

(176)   The
profitability and returns on investment improved significantly between 2008 and
the RIP. The profit on sales in the Union market increased from -7.9% in 2008
to 5.3% in the RIP, while return on investment improved from -9.6% to 10.6%.
The year 2008 was affected by the particularly poor performance of one Union producer.
Nevertheless, the improvement of the financial situation of the Union industry in
2009 and 2010, when prices were below their 2008 levels, evidences the loose
relationship between prices and profitability. On the contrary, the improvement
of profitability appears closely correlated to the improvements in capacity
utilisation and to the productivity gains observed above.

(177)   Thanks to the global market
developments at the break of 2010/2011, coupled with the restructuring efforts
and efficiency gains described above, the Union industry was able to improve
its profitability in 2010 and to reach the level of 5.3% in the RIP.

(178)   One interested party argued
that this development was unexpected and extraordinary, not to be considered
representative of the overall situation of the Union industry.

(179)   In this respect it is to be noted that the Union industry
was able to benefit from the PET price increase at the end of 2011 and
beginning of 2012 as it had fixed the PTA price before the described market
events occurred. Based on the statistical sources concerning the post-RIP
development, submitted by the parties, the profit margins of PET producers went
substantially down in 2012. This confirms that the profitability in 2011 (RIP)
was indeed largely influenced by unexpected and temporary global economic
events (recital (155)) that are unlikely to recur and cannot be considered
permanent and representative of the situation of the Union industry.

Table 14

Profitability and Return on Investments

|| 2008 || 2009 || 2010 || RIP

Profitability Union sales || -7.9% || 1.6% || 4.8% || 5.3%

Index || 100 || 221 || 261 || 267

Return on investment || -9.6% || 2.3% || 8.9% || 10.6%

Index || 100 || 224 || 292 || 310

Source: Questionnaire replies

(f)
Cash flow and ability to raise capital

(180)   The cash flows improved
significantly over the period considered reflecting the recent improvement of
the profitability of the Union Industry.

Table 15

Cash flow

|| 2008 || 2009 || 2010 || RIP

Cash flow (EUR) || - 59,419,394 || 40,940,883 || 96,614,649 || 103,761,169

Index (2008 = 100) || 100 || 269 || 363 || 375

In % of turnover || -5.9% || 4.5% || 8.3% || 7.5%

Index (2008 = 100) || 100 || 176 || 242 || 229

Source: Questionnaire replies

(181)   There were no particular
indications that the Union industry would have encountered difficulties in
raising capital, mainly as the Union producers are incorporated in larger
groups.

(g)
Investments

(182)   The level of investments was
overall reduced by 35% over the period considered. The initial investments made
in 2008 were cut sharply in 2009 and have not fully recovered since.

Table 16

Investments

|| 2008 || 2009 || 2010 || RIP

Investments (EUR '000) || 72,341,598 || 5,404,705 || 15,994,659 || 47,217,003

Index || 100 || 7 || 22 || 65

Source: Questionnaire replies

5.           Conclusion on the
situation of the Union industry

(183)   The analysis of the macro-economic
data showed that the Union industry decreased its production and sales volumes during
the period considered. The Union industry's market share has not fully
recovered since the initial drop in 2009 and it showed an overall decrease of 3
percentage points over the period considered (to 77% in RIP). The decline in
employment and capacity is a result of the on-going restructuring and is to be
seen in the context of increasing capacity utilisation and productivity.

(184)   At the same time most of the
relevant micro-economic indicators showed signs of improvements. The
profitability, return on investment and cash flow rose significantly, in
particular in 2010 and in the RIP. The investments, on the other hand,
plummeted in 2009 and have not recovered since.

(185)   Overall, the economic situation of the
industry has improved. However, these improvements are
relatively recent and to some extent based on
unforeseen and temporary market developments at the break of 2010/2011 (see
recital (155) above). This appears to be supported by the information available on the developments of the margin of the
Union industry in 2012 (see recital (179) above) that show a decline as
compared to RIP.

(186)   In view of the above
analysis, the situation of the Union industry has improved and no material injury
appears to be taking place. Nevertheless, despite apparent positive trends and
the significant restructuring efforts, the situation of the Union industry is
still fragile.

(187)   Following
the disclosure some parties contested the conclusion
that the Union industry was still fragile claiming that the Union industry was
in a healthy state and has substantially transformed since 1999. It is noted
that as explained above (recital (184)), despite the overall improvement and
consolidation, not all economic indicators developed positively over the period
considered. For example, production and sales volumes as well as market share
decreased. Moreover, the improvements were relatively recent and with a fall of
profitability in 2012 appeared short-lived. On this basis it was considered
that while no material injury proved to exist in RIP, the Union industry was
still in a fragile state. The argument was therefore rejected.

(188)   Following the disclosure
some parties contested the use of data referring to period beyond RIP for the
analysis of the economic situation of the Union industry. In response to this
claim it is confirmed that the situation of the Union industry was assessed for
the period considered and on this basis no material injury was established. However,
the development of profitability of the Union industry beyond RIP is in this
case relevant mainly in the context of the extraordinary nature of the global
market developments at the break of 2010/2011. It also illustrates the
volatility typical for this sector. The argument is therefore rejected.

E. LIKELIHOOD OF RECURRENCE OF
INJURY

1.           Impact of the projected
volume of imports and price effects in case of repeal of measures

(189)   The
investigation has shown that the imports from India continued to be subsidised and that there
are no indications that the subsidisation would be reduced or discontinued in
the future.

(190)   A prospective analysis of
the likely import volumes in the Union from India revealed that, given the
excess capacity available for exports (see recital (125) above), the price
levels in the Union and the attractiveness of the Union market, the imports
from India are likely to increase to levels above those reached in the RIP, if the
measures were repealed. With the planned capacity expansions, the excess
capacity available for exports is estimated to reach about 600,000-700,000 tonnes
in the near future, which would represent around 21-25% of the total Union
consumption in RIP.

(191)   Given the continuation of
subsidisation, the prices of imports from India are expected to further
decrease, should the measures against India be lifted. Also, as the exporters
will have to compete against low priced imports from other countries, they are
likely to lower their prices further in order to increase market share on the Union
market.

(192)   On this basis, the Union industry
is likely to be exposed to substantial volumes of imports from India at subsidised
prices below the average prices of the Union industry, undermining the recently
improved economic situation of the latter. As a result, the material injury is
likely to recur should the measures against India be lifted.

2.           Production capacity and excess
capacity available for exports

(193)   As indicated above (see
recital (125) above), the exporting producers in India have the potential to
increase their export volumes to the Union market. India had a significant
growth in its production capacity over the period considered (see recital (125)
above). According to the information available it is expected to increase its
capacity further, creating a gap between domestic consumption and production
capacity available for exports of 600,000-700,000 tonnes in the near future. Such
excess capacity available for exports has to be considered as significant as it
represents around 21-25% of the current Union consumption in RIP.

(194)   Therefore, although the
imports to the Union were relatively low, they more than doubled over the
period considered and there is a risk that significant exports from India could be diverted to the Union.

3.           Loss of export markets

(195)   Trade defence measures are currently
in place against Indian imports in Turkey and South Africa. The consequent
possible loss of these export markets for India is another indicator that the Union
market is likely to be targeted if the measures were allowed to lapse.

(196)   Following the disclosure
some parties contested the conclusions regarding the loss of export markets for
  India. It was claimed that both markets were marginal export market,
therefore no significant export volumes from these markets could be redirected
to the Union if the measures were lifted. It is noted that only the existence
of the trade defence on some markets excludes any meaningful comparison of the
relative importance of the markets with and without measures for a given
country. In addition, contrary to the claim, it was not considered that the
export volumes from India placed on these markets would be redirected to the
Union market. Instead, it was considered that the existence of the trade
defence measures on other third markets restricts the absorption capacity of
third markets as regards the foreseen increase in excess capacities available
for exports in India. This argument was therefore rejected.

(197)   The existence of trade
defence measures in third countries is also an indication that the pricing
behaviour of Indian exports is likely to replicate on the Union market.

4.           Attractiveness of the
Union market

(198)   The Union PET market is
attractive in terms of its size and prices, being the third largest market in
the world, with a structural
need for imports and higher prices as compared to other markets. In the case of
 India, the import prices to the Union tend to be higher than the prices to
other third countries, which points to the attractiveness of the Union market
for the Indian exports. This is well illustrated by the fact that the imports
from India have doubled over the period considered despite the measures in
force.

(199)   The attractiveness of the Union
market for exporters is also confirmed by the fact that the Union industry
continued to lose market share to the rising imports from the countries without
measures. This is in particular true in the case of South Korea that
significantly increased its exports to the Union market in 2012 after the
measures against the country have expired.

5.           Other factors

(200)   The impact of the imports
from other third countries with measures on the situation of the Union industry
was not considered significant, due to the relevant low import volumes and
substantial decrease of their market share in the RIP.

(201)   The
volume of imports from
other third countries without any measures increased during the period
considered, however, the respective average import price remained close to the
Union industry average price. Therefore, the impact of the imports from these
countries on the situation of the Union industry is considered limited.

6.           Captive market

(202)   Following the disclosure some parties claimed that
due to the vertical integration between PET producers and converters, a
considerable part of PET was sold for captive use that did not compete with imports.
It was also claimed that share of captive market was significant, affecting the
results of the analysis.

(203)   Based on the information
collected at the level of sampled Union producers the proportion of captive
sales was found not to be significant (below 10%). It has to be underlined that
the parties in question expressed the presence of PET producers in the
packaging business in terms of the installed production capacity of PET and not
in terms of their market share in packaging. Therefore, the claim on
significant proportion of captive use was found unsubstantiated. As regards the
price levels, the prices of related and unrelated sales were found to be within
the same range.

(204)   On
these grounds it was concluded that the distinctive analysis of the impact of
captive sales was not necessary and the claims of the parties were rejected.

7.           Comments of the parties

(205)   Some parties argued that the
injury due to imports from India did not exist during the RIP as evidenced by the
relative economic health and profits of the Union industry. It has to be note
that, indeed, no continuation of injury has been established in the present
case, and therefore the claim of the parties corresponds to the investigation
findings.

(206)   Some parties claimed that
other factors, such as structural inefficiencies of the Union industry and lack of investment as well as seasonal and
conjunctural factors (e.g. bad weather, economic crises) could have an impact
on the situation of the Union industry. Concerning the first point raised, it
is to be noted that the restructuring of the Union industry is already taking
place and the efficiency gains obtained suggest that the claim of the parties are
unfounded. As to the conjunctural factors, although the economic crises did
have an impact on the situation of the Union industry in 2009, as mentioned
above (recital (171) above), the relevant effects do not appear to be currently
present anymore. Concerning the effect of bad weather, this could partly
explain the shrinking consumption in the RIP, however, on the one hand, its
alleged impact on the situation of the Union industry has not been
substantiated and, on the other hand, the slight drop in 2011 appears to be
rather linked to temporary scarcity of raw materials due to the global market
developments in 2011. Therefore, none of these claims is justified in view of
the findings of the investigation.

(207)   Furthermore,
some parties argued that the recurrence of injury in this case is unlikely if
the measures were to expire, given that thanks to its structure (concentration
and vertical integration) the Union industry is shielded from the effects of
the imports. Moreover, it has been argued that a shift to imported PET is
neither desired nor possible in the near future, in particular as purchasing
contracts and policies as well as homologation process of large brand owners
(downstream users) makes changes of PET suppliers cumbersome. It is to be noted
that based on the findings of the investigation the Union industry continued to
lose market share to the benefit of imports during the period considered; this shows,
on the one hand, that the Union industry is not shielded from the effects of
the imports and, on the other hand, that the switch to imports is not
hypothetical but is actually already taking place. The arguments had to be
therefore dismissed.

(208)   Following the disclosure some parties reiterated the claim
that the Union industry was shielded from the potential competition of imports
due to its structure. Firstly, as regards the claim on dominant position of one
of the producing groups in the Union market controlling five producers, it is
noted that the Union market is an open market with other eight producers operating
outside this group and growing competition of imports from third countries –
with and without any measures in place. Secondly,
concentration is typical for this type of business based on commodity product
that relies on economies of scale for its competitiveness. Thirdly, no price
leader was found to exist on the Union market. Finally, parties reiterated that
the impact of the imports from the three countries concerned in the light of the
vertical integration of some Union producers with the packaging industry or
with producers of PTA was not analysed. As established in recital (205) above these
aspects were indeed analysed and found unsubstantiated. Moreover, the
verification of companies concerned by vertical integration with producers of
raw materials confirmed there was no comparative advantage as the transfers
were made at market price. Based on the above, the claim that the Union industry
would be shielded from the competition was rejected.

(209)   Last, some parties argued
that no elements support a conclusion that the Indian export capacity may
target the Union market at ‘cheap prices’ given that (i) the domestic demand in
India is growing and is expected to continue to grow; (ii) PET in excess of
domestic consumption exists, yet competition in export markets has not resulted
in exports at abnormally low prices; (iii) increases in production capacity in
Asia responds to the increase in demand expected worldwide. It is to be noted
that the findings in the present investigation demonstrate that the projected growth
of capacity shows a growing excess of the production capacity over domestic
demand. In addition, the Indian prices on third markets were lower as compared
to the Indian imports prices to the Union. Based on the findings described
above in recitals (189) to (199) it is likely that the subsidised Indian imports
will target the Union market at substantial volumes and below the average price
of the Union industry should the countervailing measures be allowed to lapse. On
these grounds the arguments of the parties are dismissed.

8.           Conclusion on the
recurrence of injury

(210)   On
the basis of the foregoing it is concluded that it is likely that substantial volumes
of subsidised import from India would be redirected to the Union should the countervailing
measures be repealed. Thanks to the continued subsidisation, the prices of the imports
would most likely undercut the Union industry prices. Also, the prices of these
imports are likely to decrease even further should the Indian exporting producers try to increase their market
shares. This would in all likelihood have the effect of reinforcing the price
pressure on the Union industry, with an expected negative impact on its situation.

(211)   During the period considered
the situation of the Union industry improved, in particular in terms of
productivity and capacity utilisation as well as profit margins that has reached
in the RIP a level close to the target profit established in the original
investigation. It can therefore be concluded that the Union industry, albeit
still in a fragile situation, did not suffer material injury during the RIP.
However, given the likely substantial increase of subsidised imports from India, which are likely to undercut the Union industry’s sales prices, it is concluded that
the situation would very likely deteriorate and the material injury would
recur, should measures be allowed to lapse.

F. UNION INTEREST

(212)   In accordance with Article
31 of the basic Regulation, it was examined whether the maintenance of the
existing countervailing measures would be against the interest of the Union as a whole. The determination of the Union interest was based on an appreciation of
all the various interests involved. All interested parties were given the
opportunity to make their views known pursuant to Article 31(2) of the basic
Regulation.

(213)   It should be recalled that the
adoption of measures was considered not to be against the interest of the Union neither in the original investigation nor in the last expiry review. Furthermore, the
analysis in the last expiry review was carried out in the situation where the
measures had been already in place and thus the assessment took into account
any undue negative impact on the parties concerned by the measures in question.

(214)   On this basis, it was
examined whether despite the conclusions on the continuation of subsidisation
and likelihood of recurrence of injury, any compelling reasons existed which
would lead to the conclusion that it is not in the Union interest to maintain
measures in this particular case.

1.           Interest of the Union
industry

(215)   The continuation of the countervailing
measures on imports from India would help the Union industry to continue the
on-going restructuring and enhance its only recently improved economic
situation, as it would help avoiding that the Union industry is exposed to the
substantial volumes of subsidized imports from India, which the Union industry
could not withstand. The Union industry would therefore continue to benefit
from the maintenance of the current countervailing measures.

(216)   Accordingly, it is concluded
that the maintenance of countervailing measures against India would be in the interest of the Union industry.

2.           Interest of unrelated
importers in the Union

(217)   None of the unrelated
importers cooperated in the present review. Despite the measures in force the
imports from India continued and nearly doubled over the period considered.

(218)   The imports from other third
countries without any measures were also available and reached significant
market share during the RIP (see recital (149) above). Therefore, even with the
measures in place, importers had access to alternative sources of supply.

(219)   Bearing in mind that there
is no evidence suggesting that the measures in force considerably affected
importers, it is concluded that the continuation of measures will not be
against the interest of the Union importers.

3.           Interest of the suppliers
of the raw materials in the Union

(220)   The raw material for the
manufacturing of the product concerned is PTA/MEG. Two out of five known
suppliers of raw material (one supplier of PTA and one of MEG) cooperated with
the investigation by submitting the questionnaire reply. Both suppliers of the
raw material expressed their support for the continuation of the measures.

(221)   The investigation showed that
the cooperating PTA producer represented a substantial part of the PTA
purchases of the sampled Union producers in the RIP. Given that PTA has no
other use in the Union than the production of PET, it is reasonable to assume
that PTA producers are largely dependent on the PET industry.

(222)   As to the cooperating MEG
supplier, MEG represented relatively small part of its total turnover in the RIP.
With regard to MEG, PET is not its only or major possible application and MEG
producers are less dependent on the situation of the PET industry. Consequently,
it is considered that the continuation of measures against subsidised imports
of PET from India would have a positive, although likely limited, impact on the
suppliers of MEG.

(223)   It was alleged that the
suppliers of raw material do not depend on the Union producers of PET; in
particular, as it was argued that two out of four sampled Union producers were
in fact importing the raw materials.

(224)   In relation to this claim
the investigation has shown that the imported material was predominantly MEG
that can also be used for other than PET applications. No indications were
gathered showing more than negligible imports of PTA to the Union. Therefore,
this claim does not affect the conclusions taken as regards the dependency of
PTA producers on PET production in the Union.

(225)   Consequently, it is
considered that the continuation of measures against subsidised imports of PET
from India would benefit the PTA producers and also, although to a lesser extent,
the MEG suppliers. As a consequence the continuation of measures against
imports from India would not be against the interest of the raw material
suppliers.

(226)   Following the disclosure
some parties claimed that PTA was exported and therefore the PTA producers were
claimed not to be dependent on Union industry. No evidence supporting this
claim was presented. Therefore the argument of the parties was dismissed as
unsubstantiated.

(227)   Moreover, the same parties
claimed that lifting the measures will not have any impact on the PTA producers
as the cooperating users will allegedly not switch to imports and will continue
to source PET from the Union industry. Therefore, the level of PTA consumption
in the Union will remain the same. Based on the findings of the investigation
the Union industry continued to lose market share to the benefit of imports
during the period considered. This shows that the switch to imports is not
hypothetical (see recital (164) above). The argument of the parties was
therefore dismissed.

4.           Interest of PET recycling industry

(228)   The Union industry argued
that the situation of the recycling industry depends on the sustainable price
of virgin PET (non-recycled PET) on the Union market. Their claim was
substantiated by a press release of an association of plastic recyclers in Europe, according to which a potential lifting of the measures on virgin PET could further worsen
the situation of the recycling industry.

(229)   Some interested parties
contested that the situation of the recycling industry depends on the
sustainable price of virgin PET on the Union market arguing that the prices of
virgin PET and recycled PET were unrelated. It was claimed that recycled PET is
mainly used for the production of polyester fibre and therefore cannot be
linked to the price developments of virgin PET. In addition, it was noted that the
recycled PET is entirely supported by bottle-fillers and thus the industry does
not depend on PET producers. Finally, it was also noted that recycling industry
did not come forward as an interested party in the present investigation.

(230)   Since the recycling industry
did not come forward in this investigation, none of the above-mentioned
allegations could have been verified against the actual figures. Therefore, it
is considered that in overall the measures in force would not be against the
interest of the recycling industry in the Union.

5.           Interest of the users

(231)   The product concerned is
predominantly used to produce bottles for water and other soft drinks. Its use
for the production of other packages (foodstuff, sheets, etc.) remains
relatively limited. Bottles of PET are produced in two stages: (i) first a
pre-form is made by mould injection of PET, and (ii) later the pre-form is
heated and blown into a bottle. Bottle making can be an integrated process
(i.e. the same company buys PET, produces a pre-form and blows it into the
bottle) or limited to the second stage (blowing the pre-form into a bottle).
Pre-forms can be relatively easily transported as they are small and dense,
while empty bottles are unstable and due to their size very expensive to
transport.

(232)   On this basis, two main
groups of downstream users have been established for studying of the impact of
the measures in force: (i) converters and/or bottle makers, converting PET
chips into pre-forms (or bottles) and selling them for downstream processing;
and (ii) bottlers, filling (and blowing) the bottles out of pre-form; this
group represents mostly the producers of mineral water and soft drinks. The
bottlers are often involved in the PET business either via integrated bottle
making operations or via tolling agreements with subcontracted converters
and/or bottle makers for whom they negotiate the PET price with the producer
(soft tolling) or even buy the PET for their own bottles (hard tolling).

(233)   Seventeen
(five converters and twelve bottlers) cooperated in the investigation and provided
information collected by the questionnaire. The cooperating converters represented
22.7% and bottlers 13% of the total consumption of PET in the Union. The replies of bottlers came from various
branches of the multinational companies (known as brand-owners).

(234)   It has been established that
the cooperating users sourced PET predominantly from the Union producers and
only a small proportion was sourced from imports. The imports from India represented roughly half of these imports and thus a minimal proportion of the
sourced PET. Nevertheless, the imports from other third countries without any
measures were also available and reached significant market share during the
RIP (see recital (149) above). Therefore, even with the measures in place, the
users had access to alternative sources of supply.

6.           Arguments of the users'
industry

(235)   Users claimed to be significantly
affected by substantial increases in the price of PET in recent years which cannot be transferred to retailers and consumers in
the current economic environment. It is claimed that these price
increases have resulted from accumulation of many years
of application of trade defence measures, which have protected the Union producers
from the competition of imports at the time when the Union PET industry became
more concentrated and integrated. As a result, the users claimed that the
measures in place, through their alleged impact on the price of PET, are
responsible for the deterioration of the downstream industry's employment,
R&D and competitiveness on export markets, with a more acute impact on
SMEs. It was also claimed that the job losses due to the measures in force
exceeded the number of people currently employed by the Union PET industry.

6.1.        Price sensitivity and cost
structure of the users

(236)   As
regards the PET price sensitivity of converters, PET was found to represent around
80% of the total costs. PET is therefore considered a critical cost component
for this type of activity. In addition, the converters' industry was found to
be rather fragmented with a relatively weak negotiating position against large bottlers
and inherent structural problems typical for the commodity based industry. As a
result, this sector showed an increasing tendency to vertical integration with
bottlers and the use of tolling agreements on the basis of which the conversion
fees are guaranteed and the PET price is ultimately negotiated and paid by the
bottlers. It is estimated that substantial part of PET purchases on the Union
market is controlled directly by the large bottlers. Since the contracts for
pre-forms often include a mechanism for reflecting the variation of PET prices,
the convertors are increasingly neutral towards the developments of PET prices.

(237)   Following the disclosure
some users contested the conclusion on the increased use of tolling and price
formulas. The information in the file confirmed existence of such trend. The
claim was therefore dismissed.

(238)   It was claimed that the
measures in place would not cause damage to the converters, if similar measures
were applied on imports of preforms into the Union. It was argued that in the
areas close to the Union border with third countries, in which there are no
measures against imports of PET from India, there are incentives to delocalise
the production of preforms and import them free of countervailing measures on
PET into the Union. It is acknowledged that to some extent there is an economic
rationale for this process to be happening. However, given the transportation
cost, the delocalisation is likely to occur only within limited distances. In
overall, the claimed negative impact of the measures in question on some
converters is therefore considered to be marginal.

(239)   As regards the PET price
impact on bottlers, based on the reported figures, the PET is estimated to
represent on a weighted average basis 9% of total costs of bottled soft drinks
and 12% of the total costs of bottled mineral water. This shows that PET is not
the main cost component for the bottling industry.

(240)   In addition, the
investigation has established that PET was the preferred although not the
exclusive packaging material of bottlers. PET products represented 75% of the
turnover of water bottlers and 50% of the turnover of producers of soft drinks.
Furthermore, the investigation showed that contracts between many large bottlers
(brand owners) and PET
producers were based on a formula whereby the price was adjusted to reflect
fluctuation of prices of raw materials for PET. This confirms the existing negotiating power of the large and
thus the most representative bottlers over the conversion margin of the PET
producers.

(241)   Following the disclosure
some users reiterated their argument that PET is a basic cost component for converters,
soft drink and bottled water industries and the findings in this respect were
inaccurate and not based on the reported data. It is noted that the situation
of converters was analysed separately and this comment is in their case
unfounded (see recital (236) above). As regards the assessment of the situation
of the bottlers it is confirmed that the cost ratios established in the
investigation are based on the figures reported by the cooperating bottlers
following a methodology available to all parties. The established cost ratios were
in line with the findings of previous investigations concerning the same
product concerned[17]. The claims of the parties were therefore considered
unsubstantiated.

(242)   Following the disclosure
some users claimed that the essence of the company specific data and
information provided by them was not reflected in the analysis of the Union
interest. It is confirmed that the data was used as reported by the users in
their questionnaire replies. The calculation methodology was made available to
all parties concerned. On this ground the claim was rejected.

(243)   The investigation has also established
that based on the expected and/or desired decrease of PET prices estimated by
the verified bottlers themselves, if the measures would result in negligible cost
reduction for the bottlers. Based on these estimates of PET price decrease and
the established cost ratios, the respective cost reduction was calculated to be
within the range of 0.3-0.7% of the total costs of the bottlers for their PET-related
activities.

(244)   Following the disclosure
some users disputed this conclusion arguing that any saving in costs would be
significant. Some users put forward new estimates in their submissions without
providing any new evidence. It is emphasised that the prospective savings are
hypothetical, as was also admitted by some users themselves. As regards the
converters, no quantification of prospective saving was put forward for this
segment. As regards the bottlers, it was considered that should the alleged PET
price decrease materialise, in the light of the costs structure of the
bottlers, saving within 0.3%-0.7% of total costs cannot be considered
'significant'. Since no new evidence was provided, the claim was dismissed as
unsubstantiated.

(245)   It was claimed that some
bottled-water producers have inherent vulnerabilities stemming from legal
requirements imposed for the source water to be bottled at the source and
limited extraction volumes. The sector is being dominated by SMEs, which has an
impact on the cost structure of the companies in questions. Also, variations
have been observed in the price levels of final products across Member States
depending on the purchasing power of the local population. On these grounds it
is considered that the impact of an eventual decrease of PET prices, if the
measures were lifted, would be more pronounced for this part of the bottling
industry.

6.2.        Alleged premium prices and
profits of Union industry

(246)   Some parties alleged the existence
of premium prices and premium margins practised by PET producers in the Union, claiming that these would be at the origin of the price increases in 2011. This
claim was also supported by the comparison made between PET prices and spread
over the raw materials in the Union to the situation on Asian market and in the
  USA. It was claimed that this situation results from the accumulation of
trade remedies.

(247)   It
is to be noted that the increase of the prices of PET in 2011, as well as its
decline in 2009, was a worldwide phenomenon driven by the evolution of the cost
of raw materials (see recital (155)). Data submitted by the parties
systematically showed a very close correlation between the evolution of PET
prices in Europe, Asia and the USA. Nevertheless, there are indeed differences in the prices of PET
across the world which are related to various reasons, in particular, the specific
cost structure in each region,. As regards the argument on existing premium
margin in the Union, it is noted that even under exceptional circumstances in
late 2010 and beginning of 2011 the Union industry has merely reached the
profitability considered reasonable for this type of industry. No evidence of
premium profit was found. Therefore, the argument on existing 'premium' prices
and 'premium' margins on the PET in the Union that are due to the existence of
the measures in question has to be rejected.

(248)   Following the disclosure
some parties reiterated their argument that the prices in the Union were
unjustifiably high reflecting the impact of accumulation of anti-dumping
measures operating in a market with concentration among Union producers, vertical
integration and limited production unable to satisfy the consumption. It was
also claimed that the price data also showed that the higher prices in the Union are not reflecting the higher costs of raw materials. It is noted that the arguments
on concentration, vertical integration and production capacity of Union
industry were addressed in recitals (207) and (259) respectively. As regards
the claimed impact of these factors on the PET price in the Union it is
recalled that the PET price development is driven by the price of raw materials
that account for up to 90% of cost of PET (see recital (173) above). Also, the
increase in PET prices in 2010/2011 was a worldwide phenomenon (see recital (172)
above). The claims of the parties were therefore unsubstantiated.

(249)   As regards the argument concerning
the gap between the Union PET price and prices in Asia and US, and in addition
to findings already stated in recital (244) above, it was found that the
difference in prices between US and Union market was volatile, yet moderate. Union
prices were not systematically higher as claimed. Union and Asian market were
found to be very different in terms of cost structures linked in particular to
the size of the market and economies of scale, access to the raw materials and
capacity. Therefore, comparing the average prices between these two markets was
not meaningful. The argument of the parties was therefore found
unsubstantiated.

(250)   Also, some parties claimed
that the prices in the Union reflect a higher spread over the cost of raw
materials as compared to US or Asia. The comparison of spreads follows the same
logic as comparison on prices on various regional markets with the difference
that the variations of prices of raw materials between various regional markets
are accounted for. Nevertheless, the existing structural differences between
the markets can justify the difference in conversion fees. The extraordinary
profits made by Union industry at the break of 2010/2011 were explained in
recital (179) above. In none of the situations the measures were found to play
a role. Therefore the argument of the parties was rejected.

(251)   The same parties also
claimed that the largest producer in the Union charged higher prices in the
Union than on other markets and recorder higher revenues in 2010 in the Union than elsewhere. In this context, it is considered that it is economically justifiable
that a transnational company would have different cost structures and thus
different prices on different regional markets. The exceptional profitability
levels at the break of 2010/2011 were explained in recital (179) above. On
these grounds the argument was rejected.

6.3.        Economic situation of users
and claimed impact of the measures

(252)   Further claims were made as
regards the worsening economic situation of the user's industry, such as
closing facilities and reducing employment. It was alleged that this was the result
of the PET price increase. In addition, it was claimed that the competitiveness of European leading brands has
been eroded as their exports in third countries were in direct competition with
bottled-products that benefit from PET at international prices.

(253)   It should be noted, that based
on the information submitted by the cooperating users, the users segment was
not found to be loss-making even though there was a decline in the overall
profitability level in RIP. The profit margin of the
users' industry established on the basis of the questionnaire replies according
to the methodology made available to all parties was found to be at similar
level as the profitability established for the Union industry in RIP. The two verified companies (bottlers) reported further expansions in
production volumes and increased profitability over the period considered. Some
converters were found operating on tight margins, in some cases facing
structural and financial difficulties. However, no direct the link with the measures
in place could have been established in this respect. Similarly, certain
decline in the economic situation of the bottlers was linked to the squeeze
caused in 2011 by the sudden increase of PET price that could have not been
passed on to retailers under the current economic downturn. However, while it
has been established that the situation of the users industry deteriorated to
certain extent in 2011, the link between the decline and the existence of the
measures was not demonstrated, especially given that the measures were in places
since 2000.

(254)   Following the disclosure
some parties disagreed with the conclusion that the users' industry was not
loss making. The parties also claimed that the profit margins of users were
lower than those of the Union industry. As regards the assessment of
profitability of the users' industry, the information collected from the
cooperating users contradicted this claim. The methodology was made available
to the parties. Although some cooperating users could have been loss making,
the user's industry was overall found to be profitable. In any event, if the
increase of PET prices was found to be one element affecting the profitability
of the users, no link between the measures and the profitability of the
companies in question was demonstrated. As regards the comparison of profit
margins of users and the Union industry, this claim was not substantiated. Due
to the volatility of the profitability of the Union industry (see recitals (176)
to (179) above) the comparison between the two segments was not considered
conclusive. In any event, the both segments showed similar profitability levels
during the RIP (see recital (253). In this light, the comments of the parties were
rejected as unsubstantiated.

(255)   As regards the alleged
erosion of the competitiveness of the exports of the Union producers of bottled
mineral water/soft drinks, this claim was neither substantiated, nor has a link
to the existence of the measures in place been in this context demonstrated.

(256)   Following
the disclosure the parties reiterated that the rising
PET prices have a negative impact on the competitiveness of exports of bottled
water. It is recognised that the PET price increase,
among other things, can have a negative impact on the competitiveness of exports of bottled water. Nevertheless, since no link between
the PET price increase and the measures in question was found as the PET prices
primarily derive from the prices of raw materials, the claimed impact of the
measures on the eroded competitiveness was rejected.

(257)   Finally,
as to the claimed effect of the measures on the employment, the investigation
revealed that the verified job losses of the users industry were predominantly linked
to the productivity and efficiency gains and a part concerned the reduction of
the temporary staff.

(258)   Following the disclosure some
parties disputed this finding on the grounds that it did not reflect the
situation of the entire sector. In addition to the findings described in
recital (254) above, it is noted that total jobs reported by the converters significantly increased and none of them
reported job losses. Bottlers claimed job losses as a result of increased PET
price. However, the increase in PET price being a worldwide phenomenon, no link
between job losses and the measures was established. Furthermore, 90% of the
job losses reported by the users’ questionnaires replies were concentrated on three
companies. One of them, a verified user representing substantial part of the
reported job losses, increased substantially its volumes over the period considered
and such losses are therefore associated to productivity gains. As for the
remaining two companies, they were found to have the profitability margins among
the highest of the cooperating parties in their segment and above the target
profit of the Union industry in this case. The claims were therefore dismissed.

6.4.        Other arguments

(259)   Following
the disclosure some parties argued that the Union producers do not have
sufficient capacities to meet the existing demand. It is noted that the Union
industry operated at 86% of its production capacity in RIP and has sufficient
spare capacity to cover total domestic consumption of PET. In addition, imports
from other countries with and without measures continue to exist and have an
increasing tendency. Also, the current measures expired in case of South Korea and are lifted for imports of
the product concerned from Malaysia and Indonesia. In addition, PET recycling
industry may constitute further source of PET to cover the PET demand in the Union. For these reasons, the alleged problems faced by users due to the claimed
insufficient production in the Union were not considered substantiated.

(260)   Following the disclosure
some users claimed the analysis did not address the claimed adverse impact of
the accumulation of measures on the product concerned under the present review.
In response to this argument it is noted that the countervailing measures
merely remedy the injurious effect of established subsidisation. The existence
of the claimed 'accumulated' effect was not demonstrated. On the contrary,
despite the measures in place, the imports from countries with measures
continue and their volumes even increased during the period considered. Also,
imports from countries without any measures are available with a growing trend
and at substantial volumes. The argument of the parties was therefore
dismissed.

7.           Conclusion on the Union
interest

(261)   To conclude, it is expected
that the extension of the countervailing measures on imports from India would
provide an opportunity for the Union industry to improve and to stabilise its
economic situation following the investments and consolidation made in the
recent years.

(262)   It is also considered that an
improved economic situation of the Union industry may be in the interest of PTA
producers and, to a lesser extent, MEG producers in the Union.

(263)   The economic situation of some
users has worsened since the last review and in particular smaller bottle-water
producers were found, among other reasons, to be negatively affected, especially
it seems, by the recent PET price increase since they were unable to pass it on
to retailers under the current economic climate. However, the exceptional price
and margin developments of Union industry in 2011 were found to be a global phenomenon primarily driven by the increase in the prices
of raw materials. Therefore, the allegations on
existing 'premium' prices and 'premium' margins linked to existence of the
measures in question were found unjustified. At the same time, Union market
continues to be an open market with existing alternative sources of supply from
other third countries without any measures.

(264)   Against this background, no
link between the PET price increase and the existing measures was demonstrated.
Economic situation of converters was found to be stable despite the measures in
force. The weight of PET in the total cost of the bottlers was found to be
limited. Furthermore, no link between the PET price variations and the measures
was demonstrated. On these grounds, the measures were found not have
disproportionate effect on the users.

(265)   Taking into account all of
the factors outlined above, it cannot be clearly concluded that it is not in the
Union interest to maintain the current countervailing measures.

G. RELATION BETWEEN ANTI_DUMPING
AND COUNTERVAILING MEASURES

(266)   A parallel investigation on
the expiry of anti-dumping measures has been carried out (see recital (8)
above). That investigation confirmed the necessity to continue the application
of such measures at unchanged levels. The present investigation also concluded
that countervailing measures on exports from India should be kept in force at
unchanged levels. In that respect, reference is made to recital (125) of
Regulation (EC) No 2604/2000. As the measures currently proposed for exports of
PET from India remain unchanged, it follows that Article 14(1) of the Council Regulation
(EC) No 1225/2009 and Article 24(1) of the Regulation are complied with.

H. COUNTERVAILING MEASURES

(267)   All parties were informed of
the essential facts and considerations on the basis of which it was intended to
recommend that the existing measures be maintained. They were also granted a
period within which they could make representations subsequent to this disclosure.
The submissions and comments were duly taken into consideration, where
warranted.

(268)   On the basis of the above
analyses the countervailing measures applicable to imports of PET originating
in India should be maintained in compliance with Article 18(1) of the basic
Regulation. It is recalled that these measures consist of specific duties.

(269)   The individual company countervailing
duty rates specified in this Regulation are solely applicable to imports of the
product concerned produced by these companies and thus by the specific legal
entities mentioned. Imports of the product concerned manufactured by any other
company not specifically mentioned in Article 1(2) of this Regulation with its
name and address, including entities related to those specifically mentioned,
cannot benefit from these rates and shall be subject to the duty rate
applicable to ‘all other companies’.

(270)   Any claim requesting the
application of these individual countervailing duty rates (e.g. following a
change in the name of the entity or following the setting up of new production
or sales entities) should be addressed to the Commission forthwith with all
relevant information, in particular any modification in the company’s
activities linked to production, domestic and export sales associated with, for
instance, that name change or that change in the production and sales entities.
If appropriate, the Regulation will then be accordingly amended by updating the
list of companies benefiting from individual duty rates.

(271)   In order to ensure proper
enforcement of the countervailing duty, the residual duty level should not only
apply to non-cooperating exporters but also apply to those companies which did
not have any exports during the RIP. However, the latter companies are invited
, when they fulfil the requirements of article 20 of the basic regulation, to
present a request for a review pursuant to that Article in order to have their
situation examined individually,

HAS ADOPTED THIS REGULATION:

Article 1

1.         A definitive countervailing duty
is hereby imposed on imports of polyethylene terephthalate having a viscosity number
of 78 ml/g or higher, according to ISO Standard 1628-5, currently falling
within CN code 3907 60 20 and originating in India.

2.         The rate of the definitive countervailing
duty applicable to the product described in paragraph 1 and manufactured by the
companies listed below shall be as follows:

Country || Company || Counter-vailing duty (EUR/tonne) || TARIC additional code

India || Reliance Industries Ltd || 90.4 || A181

India || Pearl Engineering Polymers Ltd || 74.6 || A182

India || Senpet Ltd || 22.0 || A183

India || Futura Polyesters Ltd || 0 || A184

India || Dhunseri Petrochem & Tea Limited || 106.5 || A585

India || All other companies || 69.4 || A999

3.         In cases where goods have been
damaged before entry into free circulation and, therefore, the price actually
paid or payable is apportioned for the determination of the customs value
pursuant to Article 145 of Commission Regulation (EEC) No 2454/93[18], the amount of countervailing
duty, calculated on the basis of the amounts set above, shall be reduced by a
percentage which corresponds to the apportioning of the price actually paid or
payable.

4.         Notwithstanding paragraphs 1 and
2, the definitive countervailing duty shall not apply to imports released for
free circulation in accordance with Article 2.

5.         Unless otherwise specified, the
provisions in force concerning customs duties shall apply.

Article 2

1.         Imports shall be exempt from the
countervailing duties imposed by Article 1 provided that they are produced and
directly exported (i.e. invoiced and shipped) to a company acting as an
importer in the Union by the companies whose names are listed in Decision
2000/745/EC, as from time to time amended, declared under the appropriate TARIC
additional code and that the conditions set out in paragraph 2 are met.

2.         When the request for release for
free circulation is presented, exemption from the duties shall be conditional
upon presentation to the customs authorities of the Member State concerned of a
valid Undertaking Invoice issued by the exporting companies from which
undertakings are accepted, containing the essential elements listed in the
Annex. Exemption from the duty shall further be conditional on the goods
declared and presented to customs corresponding precisely to the description on
the Undertaking Invoice.

Article 3

This Regulation shall enter into force on
the day following its publication in the Official Journal of the European
Union.

This Regulation shall be binding
in its entirety and directly applicable in all Member States.

Done at Brussels,

For
the Council

The
President

ANNEX

Elements to be indicated in the Undertaking
Invoice referred to in Article 2(2):

1. The Undertaking Invoice number.

2. The TARIC additional code under which
the goods on the invoice may be customs-cleared at Union borders.

3. The exact description of the goods,
including:

— the product reporting code number (PRC)
(as established in the undertaking offered by the producing exporter in
question),

— CN code,

— quantity (to be given in units).

4. The description of the terms of the
sale, including:

— price per unit,

— the applicable payment terms,

— the applicable delivery terms,

— total discounts and rebates.

5. Name of the company acting as an
importer to which the invoice is issued directly by the company.

6. The name of the official of the company
that has issued the undertaking invoice and the following signed declaration:

‘I, the undersigned, certify that the sale
for direct export to the European Union of the goods covered by this invoice is
being made within the scope and under the terms of the undertaking offered by ...
(name of company), and accepted by the European Commission through Decision
2000/745/EC. I declare that the information provided in this invoice is
complete and correct.’

[1]               OJ L 301, 30.11.2000, p.1.

[2]               OJ L 266, 11.10.2005, p.1.

[3]               OJ L 301, 30.11.2000, p. 88, as from time to time amended.

[4]               OJ L 188, 18.7.2009, p.93.

[5]               OJ L 301, 30.11.2000, p.1.

[6]               OJ L 266, 11.10.2005, p.1.

[7]               OJ L 59, 27.2.2007, p.34.

[8]               OJ L 340, 19.12.2008, p.1.

[9]               OJ L 232, 9.9.2011, p.19.

[10]             OJ L 168, 28.6.2012, p.6.

[11]             OJ L 301, 30.11.2000, p. 88.

[12]             OJ L 301, 30.11.2000, p. 21.

[13]             OJ L 59, 27.2.2007, p.1.

[14]             OJ C 116, 14.4.2011, p.10

[15]             OJ C 55, 24.2.2012, p.14

[16]             OJ C 55, 24.2.2012, p. 4.

[17]             E.g. Commission Regulation No 473/2010; Council
Regulation No 192/2007.

[18]             OJ L 253, 11.10.1993, p. 1.